Deloitte CN Er Tracking The Trends 2018 en 180131

Tracking the trends 2018
The top 10 issues shaping

mining in the year ahead
Contents
Changing for the better 03
1. Bringing digital to life 04
2. Overcoming innovation barriers 10
3. The future of work 16
4. The image of mining 22
5. Transforming stakeholder relationships 28
6. Water management 34
7. Changing shareholder expectations 40
8. Reserve replacement woes 46
9. Realigning mining boards 52
10. Commodities of the future 56
Out with the old, in with the new 63

Harnessing the winds of change
C
KI
NG
THE T
RE “The last 10 years have seen the rollercoaster of
N
A
highs and lows in the mining sector continue. During

DS
TR
this time, we have seen an emergence of innovative

10
RY
TH
Y
A
companies adopting transformative practices. As

EA R
S
R ANNIVE
we now stand in the middle of what appears to be

another bull run for some commodities, the next
10 years will see the continuation of rapid change
in the industry against a backdrop of declining ore
body grades, decreasing availability of tier one assets,
and continued focus on shareholder returns. To
thrive amid this volatility, companies must rethink
the traditional mining model. Change is coming and
mining companies must find ways to remain relevant.”
Philip Hopwood
Global Leader – Mining
Deloitte Touche Tohmatsu Limited
02
Changing for
the better
This 2018 edition of Tracking to strengthen balance sheet image. It is also resulting in a
the trends heralds a milestone, performance, reduce debt, more disciplined investment
marking our tenth year of exercise capital discipline, and approach—one that may
publication. Over the past simplify portfolios, this has ultimately expose the dark
decade, commodity prices resulted in improved valuation side of conservatism as supply
reached both historic highs metrics, record free cash flow, shortages begin to loom.
and historic lows, mining and stronger shareholder
companies engaged in both returns. In many respects, the In this tenth anniversary
significant acquisitions and mining sector is once again report, Deloitte’s global mining
consolidation, and operational poised for growth. professionals once again share
realities shifted irrevocably in their experiences to help
the face of a digital revolution. However, unlike previous cycles, identify strategies companies
For an industry considered mining companies appear to can take to smooth out the
staid, change has been have learned from the lessons recovery and minimize the
surprisingly constant. of the past. In paving new paths industry’s historical boom
for the future, the aim now is and bust cycle. This year,
That theme holds true over to change for the better. This our professionals also share
the past year as well. After goal is driving their ongoing their outlook for the future
hitting the bottom of the cycle, investments in innovation by identifying, in some cases,
prices for many commodities and digitization, inspiring their potential industry disruptors
have been slowly recovering, approach to the workforce of which may be on the horizon.
driven by Chinese government the future, manifesting in their Thank you sincerely for
stimulus and improved commitment to strengthen your years of support. We
demand in both developed and government and community look forward to your input
emerging economies. Coupled relations, and guiding their and feedback.
with the industry’s commitment efforts to repair their public
“As the mining industry’s value proposition is increasingly called into question,
mining companies are beginning to see that they cannot succeed into the future
unless they change the way they operate. This is about more than enhancing
efficiencies. It’s about re-establishing trust with stakeholders and collaborating
to devise better responses.”
Glenn Ives
Americas Mining Leader
Deloitte Canada
03
1
Bringing
digital to life
Using data–driven
insights to drive value
In recent years, mining waste in the areas of execution,
companies have come to realize process, structure, and design.
that value, like beauty, may be Now, however, it is becoming
in the eyes of the beholder. clear that success for mining
Once measured by how well a companies isn’t truly about
company extracted resources, adopting the latest applications
the industry’s value proposition (apps) and technologies, which
may be shifting to how well a will continue to evolve. Instead,
company acts on information it’s about embedding digital
to optimize production, reduce thinking into the heart of their
costs, increase efficiency, and business strategy and practices
improve safety. In short, data— to transform the way corporate
and the ability to organize, decisions are made. To succeed
manage, and process it—is in this effort, miners need a
rapidly becoming a competitive clear vision of how the future
differentiator and may even digital mine might transform
spur new business models. core mining processes, the flow
of information, and supporting
The adoption of new back office processes.
technologies initiated this shift,
as miners recognized the power
of digital solutions to remove
04
The future digital mine network that uses Internet of optimize their systems, from
Transitioning to the future digital Things (IoT) sensors to capture pit to customer. The aim is to
mine typically begins by focusing data in real time. create an information layer, or
on core mining processes with digital “nerve center”, that brings
the goal of automating physical Yet, the real value comes together data across the mining
operations and digitizing assets. from unlocking the insights value chain in multiple time
This includes the adoption of within this data. To do so, horizons to improve planning,
autonomous vehicles, drones, companies must rethink the control, and decision making
three-dimensional (3D) printing, way they generate and process (see figure 1).
and wearable technologies, all information. This involves
operated through a connected using data–driven analytics to
Figure 1: Integrated operational planning, control, and decision support
Integrated operational planning, control and decision support
Real time Data platforms

Real time sensor data to Integrated well governed
drive short interval control in execution, data platforms support all processes
reduce variability, and shorten and all time horizons
planning cycles
Historical Future
Reporting and analysis of historical Future insight derived from
data and insight gained from historical analysis to improve planning,
analysing trends, patterns and Digital mine nerve centre simulate the integrated supply chain,
opportunities for improvement Data driven insights drive improved and predict future outcomes,
learned from experience planning control and decision using analytics and AI tools
support across the mining
value chain
Source: Deloitte1
Integrated Enterprise planning and support processes
Maintenance Supply Energy management HSE & Community Finance HR Marketing
Digital in action
A major global miner in Australia moved its short–term production, planning, and control
activities from its mine sites to a new remote operations center. The operations center
implemented a supply chain visualization tool that provides an end–to–end (pit–to–port) view
of the company’s iron ore supply chain, showing key operational metrics in near-real-time,
permanently displayed on large screens, with data sourced from 16 disparate systems. This
was the first time the company could see its total supply chain in one place, assisting decision
making for the whole business.2
05
To be sure, analysis of historical Central to enabling this will be an

data will continue to enable insight integrated and well governed data
from trends and patterns to platform to support analysis across
identify opportunities for progress. all time horizons, and a center of
At the same time, however, miners excellence in data management,
will rely even more on real-time reporting, and analytics. It’s up to
data, derived from processing individual companies, however,
equipment and sensors during to determine the best operating
operation, to identify key drivers model for realizing this vision. While
of process variability and drive some organizations are building in-
rapid operational improvements. house analytics capabilities, others
Access to more timely data from are outsourcing their data analysis
across the value chain will allow to third-party partners. There is no
companies to update their ore optimal model, it depends on how
body models, mine plans, and the business plans to transform
financial models more frequently, into the future.
while shortening planning cycles.
Additionally, historical analysis will
inform future insight to improve
planning and predict outcomes.
Digital in action
A major global miner was looking to identify latent system
potential across its pit, rail, and port network. Data-driven
analysis generated over two million scenarios to identify
significant unrealized value in the system and tested each
one against operational reporting data to measure the
feasibility of the proposed changes (i.e., based on historical
performance, the analysis determined if it was possible to
process, move, or operate in each scenario). This determined
the most achievable scenario with the greatest potential
increase in value. The analysis highlighted that higher
production and greater shareholder return could be achieved
by adjusting traditional assumptions in mine and system
planning, all within a system that was previously considered
to be “at maximum capacity”. This rapid scenario-based
analysis is now being used to augment planning decisions on
an ongoing basis.3
06
Decisions informed by data Convergence of information “Many mining organization

Many mining companies have technology (IT) and operational
are not yet using all of the
already realized the value technology (OT) can further
of tracking data on specific enable automation and data they are capturing
pieces of equipment. The real digitization—allowing work to from operational systems,
payoff, however, will come as be moved to locations which
or are still struggling to
they begin to uncover insights can support a more diverse and
capable of informing their inclusive workforce. Similarly, improve reporting from
operational decisions in areas more mature cybersecurity legacy ERP systems.
from maintenance, safety, and programs can help address the
However, some are now
compliance to mine planning, potential threats introduced by
fleet movement, and resource exponential technologies. realizing that capturing
allocation. Achieving this level and managing the right
of insight will require miners This vision of the digital mine is
data, and using the latest
to go beyond automating core based on existing capabilities
processes and setting up a already being applied in analytic tools, can deliver
digital nerve center. They will other energy and resources significant improvements
also need to re-imagine their companies, although no
in operational productivity,
support processes for functions organization is yet doing it in an
ranging from supply and human integrated way. Those that do maintenance of assets,
resources (HR) to finance. embrace this ideal stand to see and safety of employees.”
more than productivity benefits
In many cases, this is already (typically 10 to 20 percent).
Paul Klein
resulting in companies replacing They also gain the opportunity
Consulting Partner
their enterprise resource to use data-driven insights
Deloitte Australia
planning (ERP) systems to forge closer relationships
with cloud-based solutions, with stakeholders, facilitate
adopting robotic process knowledge sharing and training,
automation (RPA) to automate drive new revenue streams,
repetitive tasks, and using access new markets, and
artificial intelligence (AI) to enhance operational safety.
support knowledge workers.
07
Leading strategies in focus

Develop a digital strategy updated more frequently, with data from sensors and
Digital initiatives are often and shorten the planning location-aware mobile devices
focused on technical solutions cycle. AI tools can improve to enable better planning,
and are not always driven by planning, simulate the prediction, and simulation
a well-articulated strategy integrated supply chain, and of future outcomes. As an
or a direct link to business predict future outcomes. initial step, companies can
value. For instance, without a RPA can replace some assess their engineering data
vision, a company may equip tasks currently performed management capabilities
operators in the pit with a by humans, presenting an and maturity to highlight
tablet or headset rather than opportunity for cost reduction. any gaps so they can focus
considering how to remove Each form of analysis can their digitization efforts on
people from the pit entirely. To be enabled by an integrated the areas of greatest value
avoid unintended outcomes, data platform, supported by and impact.
digital transformation should data scientists and analysts—
first define the desired future either in-house or on an Become an insight–driven
state and the value of the outsourced basis. Yet, even organization
initiatives to the organization while driving digital in “bite To deliver on the digital mine
as a whole. Properly conceived, sized chunks”, it is important nerve center, companies
a digital strategy can enable to work against a plan or need the capacity to use
organizations to quickly test broader roadmap to ensure data to resolve a wide range
new approaches in a pilot or that the system ultimately of business problems. Yet
sandbox environment, and integrates effectively. currently, most organizations
either roll them out in phases only use a fraction of the data
or shelve them easily. Create a digital twin they collect, let alone the
Most asset-intensive potential real-time volume
Start small organizations have difficulty they could capture via the
Delivering on the digital managing their engineering Internet of Things (IoT), and
mine nerve center does not and asset information many still struggle with
need to be an all or nothing throughout the asset lifecycle, limited business intelligence
proposition. Organizations including data integrity capability from historical
can start small by investing in issues and time wasted ERP environments and
improved visualization tools, looking for documents. non-integrated operational
integrating data from multiple Creating a digital twin can systems. To change this
sources, and reducing reliance help address this issue. A equation, miners must embed
on fragmented systems to digital twin is a digital model data science and analytic skills
enable better analysis of of the physical environment throughout the organization,
data. Real-time data captured constructed using geological, by either hiring or partnering
from processing equipment engineering, and asset with scarce analytic talent, in
and machinery sensors information—such as ore a bid to rapidly uncover the
can help identify drivers of body models, engineering insights they need to drive
process variability to enable drawings, parts catalogues, intelligent business decisions.
operational improvements, and service manuals. The
allow financial models to be model is continually updated
08
From left field

Mining companies operating with no
back office
Could effective use of data evolve to the
point that miners can operate with no
back office? Some of the major disruptive
competitors in the financial services space
have turned that industry on its head by
running with just a fraction of the overhead
required by legacy players. Arguably,
unconventional mining competitors could
run their entire operations out of the cloud,
virtually eliminating the expenses traditional
companies face to maintain a back office.
This vision may not be so far in the future.
After all, many companies already fully
outsource their back office functions—
such as finance, human resources, IT, and
procurement—to shared service centers.
Similarly, many senior mining executives
currently spend a good portion of their
time away from head office, visiting mine
sites, meeting customers and governments,
and attending investor meetings and
conferences, a trend that could ultimately
see them running their businesses virtually.
09
2
Overcoming
innovation
barriers
Charting a path towards
innovation maturity
Mining executives understand comes to innovation4. Part of
that innovation is necessary the reason is because mining
for the industry to transform. companies continue to face
This isn’t confined to just a number of organizational
technological innovation; it barriers to innovation.
includes the adoption of more
innovative approaches to Identifying the roadblocks
engaging with stakeholders, re– First, mining companies are
envisioning the future of work, traditionally averse to take on
and identifying the commodities new risks that may impact their
that will be in greatest demand cash flow or license to operate,
going forward. reducing their propensity
to pursue transformational
Despite the imperative, innovation. This is due in part
however, industry players to the way their processes are
cannot yet be considered truly structured. When innovation
mature innovators. Deloitte initiatives must compete for
research across Canada, capital against projects with
Australia, Africa, and Latin a shorter–term payback, the
America shows that the sector latter generally wins. This makes
still lacks systemic consistency sense in an age of intense
and strategic focus when it shareholder scrutiny.
10
Innovation in action
In December 2016, Vale opened its largest iron ore mine, in Brazil. The Eliezer Batista S11D
Complex includes a mine, plant, railroad, and port logistics designed to vastly reduce the
company’s environmental impact. By locating in an already–deforested area outside the
Carajás National Forest, Vale reduced vegetation clearance in the forest by roughly 40
percent. The company also adopted a range of technological innovations that promise
long–term environmental benefits. For instance, rather than using trucks to transport
ore to the plant, Vale installed mobile excavators and crushers, a system that will reduce
fuel consumption by over 70 percent and reduce waste from used tires, oil filters, and
lubricants. Additionally, the ore is being processed using the moisture it naturally contains,
cutting down water consumption by 93 percent relative to the conventional process. The
company also anticipates saving 18,000 MW of electricity per year—enough to power roughly
10,000 homes.5
It just may not bode well for the potentially business–altering distrustful of collaboration
mining sector’s sustainability innovations that majors resist and hampers the juniors’ and
over the long term. adopting given the challenges service providers’ efforts to
associated with calculating co–create or co–invent in
Second, mining companies’ the lifetime value of new partnership with the majors,
propensity to favor short– innovations. despite the fact that this type of
term cash flow generation collaboration can accrue to the
often works to the detriment Third, mining companies benefit of shareholders. Mining
of creating longer–term often lack a clear vision to companies are also accustomed
net present value. As such, guide and enable longer–term to treating access to capital as
innovations that may reduce transformation. Without this a competitive advantage, which
costs over a product’s or vision (i.e., to become the was true when the industry was
process’s lifecycle are often lowest cost operator, minimize able to rely on high quality ore
dismissed if their initial the mining footprint, build a bodies and economies of scale
costs exceed current costs. fully automated mine, etc.), to drive down costs. Today,
Frequently, operators are they struggle to tackle and however, the technologies that
dis–incented from pursuing derive value from innovation. can make a marked impact
initiatives unlikely to deliver Innovation needs focus and on mining performance are
rapid returns. Procurement companies need to take their evolving rapidly and mostly
practices are often so focused vision and align their innovation outside the mining industry.
on lowering per unit costs efforts against a series of key As a result, capital is no longer
that there is an unconscious thematic areas. the constraint. Instead, the
bias against innovators whose companies most constrained
costs exceed the lowest cost Fourth, mining companies will be those unable to
competitors—even if they’re are historically inclined to collaborate with technology
delivering superior offerings. operate in isolation. Concern leaders and integrate
This has become a sticking point around intellectual property that technology into their
among service companies and (IP) rights and competitive operations.
juniors that have developed advantage makes companies
11
A bold new vision Ecosystems and the role of in isolation. The research and
To some extent, these mining services in fostering development (R&D) groups at
innovation barriers exist greater collaboration most mining majors have been
because the design of mines A review of the innovation hollowed out, both in terms of
and processing plants hasn’t barriers in the mining industry human resources and budgets
changed in decades. Although reveals that collaboration is (see figure 2) since their apex
the equipment is more modern, frequently not within mining in the 1990s. As a result, the
miners from 50 years ago companies’ DNA. Why? In model for innovation has
would find little has changed some cases, organizations fundamentally shifted.
if they entered today’s mines, have not clearly defined which
a situation that certainly innovations to collaborate on Increasingly, original equipment
doesn’t hold true in other and which to retain in–house. In manufacturers (OEM) and
industries. That means that other cases, legal agreements supply companies have access
actual transformation requires between potential partners to more innovation capital
a new vision for the future, one become so complex that and resources and hence a
bold enough to drive a step their value is diluted—making challenge for the industry is to
change in performance and collaboration more difficult. figure out a way for miners and
enable more ambitious results The very structure of many the service sector to collaborate
from innovation. mining companies also makes more around innovation. This
it difficult to drive synergies will however require companies
The upshot is that mining across mine sites—resulting in to move beyond traditional
companies can only achieve siloed operating approaches procurement relationships.
true innovation maturity if rather than fostering a culture
they go beyond the basics of of collaboration.
operational improvements
to embrace innovation in a Critically, the nature and scope
broader sense and embed a of the industry’s challenges are
series of capabilities within making it less viable to operate
the organization.
“Although commodity prices have begun recovering, mining executives are still
feeling the sting of the recent downturn. As a result, they are collectively more
cautious than their peers likely were just five years ago. While this is spurring
ongoing focus on innovation, it also means their innovation efforts are increasingly
constrained by the need to demonstrate near–term returns. The catch is that,
unless you are trying new things, you are not learning, and if you are not learning,
you will fall behind.”
Andrew Swart
Global Mining Consulting Leader
Deloitte Canada
12
Figure 2: Mining consistently underspends in

innovation relative to other sectors
R&D/Sales
10
9
8
7
6
5
4
3
2
1
0
Mining Consumer goods Technology
2005 2006 2007 2008 2009 2010 2011

2012 2013 2014 2015 2016
Source: Deloitte analysis
While collaboration is not the in collaborative development The general idea is reciprocity.
only approach to resolving projects, a process that If juniors, for example, work
the innovation conundrum reduces innovation costs on improving exploration
among mining companies, while empowering industry performance with a focus on
it can go a long way towards stakeholders. Collaborative high–quality deposits, they will
encouraging the steady stream ecosystems can even enable increase their value to majors.
of innovations needed to cross–border collaboration If majors work on improved
build sustainable business by uniting mining clusters recovery with a focus on lower–
models over time. Structured with similar challenges across grade deposits, they will reduce
deliberately, collaborative geographical boundaries. the pressure on juniors. That’s
ecosystems allow mining a win–win where everyone has
companies to reduce risk in the These types of ecosystems increased cash for investment,
innovation process. make it clear that innovation juniors to adopt/commercialize
does not require prohibitive innovations and develop assets,
Through open industry forums, budgets. As service companies and majors to buy juniors.
for instance, suppliers and and juniors have amply
other members of the mining demonstrated, it can often
ecosystem can work together be accomplished with
to resolve mining company constrained funds, particularly
issues. Similarly, events such as when external partnerships
“hackathons” encourage large are leveraged.
numbers of people to engage
13

Develop a systematized implement governance to champion innovation by
approach to innovation systems to empower decision enabling them with the right
To determine the types of making throughout the tools, processes, technologies,
innovation to pursue so as organization. To become and know–how.
to realize transformational embedded in the organization,
change, mining companies innovation needs the support Develop metrics and
must define their innovation from senior leadership incentives to guide
strategy and rally their together with an acceptance performance
people around it. This that not all innovation Before innovation can be
includes articulating the succeeds and that failing fast is delivered as a discipline,
dimensions of their vision okay. Organizational support organizations must have the
so they can assess where to should also not only occur ability to both measure its
innovate (i.e., by focusing on from within, but collaboration effectiveness and incentivize
automation, reducing their needs to include external appropriate employee
carbon footprint, partnering parties like competitors, behaviors. This means
with stakeholders, etc.). From suppliers and communities. companies should aim to
there, companies should monitor innovation from
manage innovation as a Secure the right resources concept to prototype to
portfolio against the thematic and competencies pilot. Similarly, metrics and
areas and have a defined way To progress towards more incentives should be aligned
to move innovations from mature innovation, corporate to a company’s innovation
concept all the way through innovation efforts must strategy and reward people
to commercialization. It be adequately funded and for their accomplishments.
involves adopting structured supported with the right One global company is tackling
innovation processes that resources and capabilities to this challenge by setting aside
cut across business units deliver. In some cases, this may small portions of its mine
and support innovative ideas involve hiring ambitious talent sites as innovation testing
that arise from every level of from the technology industry, grounds where operators are
the business cultivating the types of skills not held to stringent quota
required for different kinds of and production requirements.
Build the innovation, making creativity This frees them up to think big,
organizational support related processes more test small, fail fast, and iterate
To turn innovation into an flexible, and designing more quickly before scaling proven
organizational core capability, inspiring work environments. innovations to other parts of
companies must make it Mining companies also need the mine or to other sites.
a leadership priority and to empower their leaders
06
14
Tracking
Trackingthe
thetrends 2017
trends 2018
From left field

With slowing global mine supply growth and a
shortage of world–class deposits in key commodities
like copper and gold, innovative exploration
strategies are needed. One option is undersea or
deep sea mining, prospecting for minerals on the
ocean floor. According to the World Economic Forum,
the world’s undersea reserves include 10 billion tons
of polymetallic nodules.6
Despite the resource potential, deep sea extraction is

very challenging. Yet, technical advances are making
it more commercially viable. Deep sea robots, used
extensively by the offshore oil and gas industry,
are being used in undersea mining. Innovations in
surveying technology may also allow miners to better
locate and identify undersea ore bodies.
Critically, complex environmental and access issues

will need to be balanced against the likelihood
of untold and largely untapped mineral wealth
lying beneath the waves. Environmental concerns
include the impact of plumes of dust, stirred up
by excavation of the ocean floor, on a delicate
ecosystem. As a result, some companies are
pursuing less intensive exploration techniques.
DeepGreen Resources, for example, is focused on
the exploration and development of polymetallic
nodules from the seafloor, which lie on the top part
of the seafloor. Due to their distinct mineralogy,
polymetallic nodules lend themselves to
metallurgical processing solutions that offer the
potential for significant environmental benefits.
DeepGreen’s patented process is aiming for zero
tailings, representing an important step change for
the minerals industry.
15
3
The future
of work
Re–envisioning talent
management in the digital age
As the digital mine becomes support the mobile workforce
a reality, the nature of work is across all platforms, and
poised to change dramatically, digital systems will simplify
at both the mine site and in work scheduling, while
the back office. In essence, the more robust cybersecurity
digital mine envisions that a programs mitigate the risks.
lean set of corporate processes These technologies will enable
will be augmented by RPA to core mining activities to be
automate repetitive human performed from locations that
activities, by autonomous can support a more diverse and
equipment to reduce labor inclusive workforce, including
intensity and enhance safety, primary caregivers, part–time
and by AI to support knowledge workers, and people with
workers. Fully integrated physical disabilities.
communications networks will
Automation is transforming the labor market. Deloitte

estimates that by 2035 approximately 35 percent of
current jobs in the UK will be automated.7 Similar trends
are expected in other parts of the world.
16
Inside the future of work

A global mining and metals organization was a relatively early adopter of RPA within the
industry. After an initial proof of concept focused on the invoicing process in its global shared
services center, it is now applying automation within its supply function. The objective was
to automate the manual work of the supply team in expediting material orders and seek
to increase expediting coverage beyond the top 25 vendors, which it was limited to due to
a manual time–consuming process, high volume of work, and frequency of updates. The
solution included automation of SAP supply data into an integrated data platform, the
development of a dashboard for faster inventory analysis and reporting to site supervisors,
and RPA for automation of the vendor communication process.8
Charting the implications As more work moves to shared as well. For instance, Worsley
While digital solutions will service centers and centers of Alumina—a South32 business—
augment human performance expertise, the available pool created gender–neutral drilling
by empowering people at of labor will also expand as equipment that enabled the
all levels with information to companies begin to employ deployment of its first all–
enhance their performance a mix of on–shore, off–shore, female drilling crew.9
and insights to drive better and robotic workers located
decisions, they will also cause anywhere in the world. The ramifications on work
upheaval. As manual jobs scheduling are similarly
are automated or replaced The implications are equally as significant. In the not too distant
by robotic processes, labor dramatic for frontline workers. future, mining organizations
dynamics in local communities With sensors, for instance, will be able to post available
will shift significantly. maintenance workers can work shifts online and enable
get alerts before equipment employees to use a mobile
On the positive side, this can breaks down, allowing them application to choose the shifts
translate into new employment to improve scheduling and they prefer to work. In this way,
opportunities as new roles increase equipment uptime. mining companies could attract
are created. It can deliver Similarly, shift supervisors a more diverse workforce,
significant safety benefits for can pinpoint the location of while giving frontline workers
the mining industry by literally equipment in real time, enabling greater freedom to manage
moving workers out of harm’s faster decision making and their careers.
way, and boost productivity by improving worker safety. With
reallocating those workers to interactive dashboards, mine On the other hand, greater
more productive occupations. It managers and supervisors reliance on digital solutions
can accommodate the realities can electronically interact with could result in job losses, raising
of shifting global demographics engineers with greater levels concerns about companies’
by enabling more women and of precision. And, by optimizing social responsibility towards
seniors to enter and remain in mine plans in real time, the their existing workforce. Given
the workforce. It can position whole nature of work and the imperative of mining
companies to achieve greater scheduling will change. companies to work in harmony
diversity by attracting workers with local communities, the
from historically under– Not only can work be industry’s shift to the future of
represented populations. redesigned, but equipment can work will need to be measured.
17
Rather than eliminating jobs When it comes to hiring, this use of social tools that improve
wholesale, this will likely means mining companies will communication, collaboration,
translate into concerted require access to a broader and connectivity. Leaders will
efforts to retrain people to use array of systems experts also require the capacity to
technology or redesign jobs to operate and monitor align competency frameworks
to take better advantage of autonomous machines, and to account for new robotics,
people’s existing human skills. data analysts to turn growing cognitive, and AI requirements;
To this end, mining companies volumes of data into meaningful deploy employees replaced by
should think through how to insight. This quest for scarce these technologies; and reskill
reskill and retrain people to digital talent, including software employees to complement
learn technology and tools engineers and experts in these tools.
faster, and how to design the robotics and mechatronics, will
technology so it takes almost no put mining companies against Although these issues raise
training to use. more attractive industries in potentially uncomfortable
the attraction and retention of challenges, the future of work
A new kind of miner key talent. has arrived and companies
As automation becomes more that fail to embrace this
prevalent and technology As such, miners may have disruptive opportunity could
transforms the nature of to redefine roles, change find themselves at a competitive
work, organizations will also corporate cultures, attract and disadvantage in today’s
be forced to redesign certain train in new ways, and reimagine digital age.
jobs. At the mine site, manual traditional career paths. They
workers will need to learn will also need to rebrand to
how to integrate technology raise their appeal among the
into their job functions. Those millennial talent joining the
who are more comfortable workforce. This is particularly
working with technology will salient for organizations that
also need to train and mentor continue to run their back office
employees who have less digital functions in antiquated ways. A
experience. lack of innovation in these areas
will make it harder to attract
In the back office, the those people who will be in
convergence of IT and OT is greatest demand going forward.
driving the emergence of a new
kind of mining professional, one Leadership skills will also have
that combines traditional mining to evolve. As the workforce
skills with advanced technology becomes more diverse,
skills. Mining professionals now distributed, and connected,
need to be digitally literate, mining leaders will need the
along with having strong ability to foster and support an
problem solving skills and the inclusive culture, manage across
ability to think creatively. generations, and model the
18
“Companies need to realize that
they will not be able to recreate
previous career paths as we head
into the future. Job descriptions
and the skills required are
changing wholesale, mandating a
complete re–conception of the way
in which miners must attract and
retain talent.”
Ian Sanders
Mining Leader
Deloitte Australia
19

Retrain and upskill Source and integrate talent Create a new social
Gaps in employee digital across networks contract with communities
knowledge are undermining Attracting new skillsets and governments
technology transformation from other industries may To prevent potential backlash,
efforts. In a 2016 global be a particular challenge to it is important for mining
survey of managers and mining organizations. As a companies to work with key
executives conducted by MIT result, there is a growing stakeholders to develop a
Sloan Management Review need for miners to partner shared vision for the future
and Deloitte, only 11 percent with organizations that have of work. This can include
of respondents said their deep technology expertise. working with schools to
company’s current talent Companies will need to design ensure the future labor
base can compete effectively and evolve their partnership force is properly trained,
in the digital economy. The networks to access the best explicitly discussing labor
main barriers include lack talent for specific work and issues with mining community
of agility, complacency, and cultivate a continuum of talent stakeholders, and committing
inflexible cultures.10 This sources—on and off balance to employee retraining.
speaks to the imperative for sheet, freelancers, crowds,
mining companies to compare and competitions.
their current talent pipeline
against skillsets they anticipate Redesign work for
needing in the future and technology and learning
hiring or retraining to close As the future of work becomes
identified gaps. a reality, companies must
move beyond process
Adopt new attraction and optimization to find ways to
retention strategies enhance machine–human
To attract and retain scarce collaboration. This includes
digital talent, miners should identifying areas where digital
place greater emphasis on technology can augment
nurturing and developing their worker performance as
people, creating interesting employees shift to more
and purposeful work, and productive work—for instance,
building an environment by harnessing technology to
with career flexibility and give workers richer real–time
tools that enable employees information or using AI to
to collaborate and exchange complement human judgment.
ideas transparently.
06
20
Tracking
Trackingthe
thetrends 2017
trends 2018
From left field

If AI technologies follow
the tenets of Moore’s Law,
then the cost of automation,
robotics, and cognitive
solutions are bound to
continue falling over time,
leading to a notable uptick
in adoption rates. As remote
operations become more
pervasive, and automation
becomes more sophisticated,
the miners of the future could
arguably use video game–
like controllers to operate
mine site equipment from
any location in the world.
The result? A mine with no
frontline workers. Should
this type of future come to
pass, the whole role of HR will
shift in the organization of
the future.
21
4
The image
of mining
Changing public, employee,
and customer perceptions
Although the sector has taken and engage in dubious
significant strides to improve practices abroad.
the image of mining in recent
years, in some cases, it is still As mining companies know
operating under a legacy of from harsh experience, negative
weak environmental practices, perceptions can do more than
fractious community relations, damage reputations and affect
stock price underperformance stock prices. They can also spill
relative to other sectors, over into community protests
and a historic lack of and violence, and result in
workforce diversity. the loss of a social license
to operate.
Despite the significant
contribution of the mining In a world increasingly
sector to the world’s economy, influenced by round the clock
the industry’s reputation news cycles and opinions aired
remains tarnished in many in the court of social media, this
countries due to perceptions type of backlash is only bound
that mining companies to spiral. This mandates mining
contribute to environmental companies to take proactive
damage, cause a negative steps to address, and change,
impact to the community, their reputations.
22
Raising the bar

In recent years, Rio Tinto set a new bar for tax transparency by voluntarily disclosing details
of the taxes and royalties it pays on an annual basis. BHP followed suit in 2015, committing
to develop detailed taxes–paid reports—making the two companies industry leaders in their
goal to enhance public accountability and improve corporate credibility.12
New behaviors Rio Tinto all passed shareholder of radical transparency

Notably, companies are coming resolutions regarding increased encourages companies to keep
to realize that this is not simply disclosure on climate change.11 themselves honest, creating
a public relations (PR) issue. To an environment of shared
rebuild trust with employees, “Mining companies are responsibility.
investors, communities, coming to realize that radical
governments, and the public, transparency is now a In other instances, mining
mining companies must back up prerequisite for trust,” explains companies have begun going
their messages to these groups Carole Cable, a Partner at beyond philanthropic donations
with action. This mandates a Brunswick, a communications that typically end once a mine
change in behavior. firm focused on helping site shuts down. Instead, some
companies build trusted miners have begun contributing
Increasingly, leading companies stakeholder relationships. a portion of their local revenues
are taking more decisive public “This requires them to marry to foundations that empower
stances around corporate social their social purpose with their community members to allocate
responsibility. For instance, financial purpose and craft a funds based on local needs.
in addition to enhancing the narrative that clearly articulates
transparency of their tax the value they bring to society.”
disclosures and anti–bribery
stances, many have begun to This imperative is playing out
demonstrably reduce their in interesting ways. In some
exposure to countries where instances, mining companies
the perception of corruption now enable local communities
has been on the rise. Several to test the quality of a site’s
mining companies have water emissions by setting
begun adhering to voluntary up CCTV cameras or apps
sustainability standards, that provide citizens with
including those set out by the online access to water quality
Taskforce for Climate–related data. Others give community
Financial Disclosure, the Global members the option to
Reporting Initiative, and the physically visit water discharge
Carbon Disclosure Project. sites to conduct their own tests.
Additionally, in the past year, In addition to empowering
Anglo American, Glencore, and local communities, this type
23
Re–engaging employees If companies truly hope to repair

These efforts to regain trust their reputations, however, Raising the bar
are also happening internally, they must also recognize that The BHP Foundation
as companies work to create new operational realities are was established to
a new culture to support their required, especially if they help address some of
visions for growth and hope to attract the talent of the the unprecedented
re–engage employees. future. This likely means making development challenges
structural changes at the mine society currently
One indicator of this shift site to automate the physically– faces. Through its
is the mounting focus on challenging or dangerous Natural Resource
mental health as mining tasks that may not appeal to a Governance program,
organizations work to address new generation of workers. It it aims to reduce the
the pressures many employees also means fostering a culture potential for corruption
face both within and outside of diversity and inclusion so and bribery across
the workplace. The Mental typically under–represented the resource value
Health Commission of employee groups feel a sense chain by enhancing
Canada, for instance, recently of belonging. transparency. Its goal is
began offering a mental to provide citizens with
health first aid course to the Although some companies access to information
mining industry in Northern have begun to embark on that shows the flow
Ontario.14 In Australia, as part the arduous task of shifting of funds related to
of a state–wide campaign to perceptions, there is little natural resources in
generate awareness of mental doubt that much work remains. their country, giving
health issues and the support The alternative, however, is them both the data and
available, Rio Tinto’s Hunter untenable. Miners simply cannot the tools required to
Valley mines traded their hope to sustain their license hold local institutions
standard yellow truck trays for to operate, cultivate employee to account.13
blue to indicate their improved loyalty, or win the hearts and
capacity to provide peer minds of other key stakeholders
support and related mental if they don’t engage in a
health programs.15 Glencore concerted, and multi–year,
also introduced the Mates in effort to repair their reputations
Mining program in Queensland and regain public trust.
to encourage more open talk
about the risk of suicide.16
“If mining companies truly hope to repair their image, they must do more than
change their messaging. They must also fundamentally change their behaviors
around the way they mine how they engage with communities, attract talent,
and deliver on their promises.”
James Ferguson
Global Mining Tax Leader
Deloitte UK
24
Reimagining reputations
When the ePrix, the electric vehicle version of the Grand Prix, makes its debut in Santiago in
2018, it will be sponsored by Antofagasta Minerals. The company’s decision to put its name
on this first edition of the all–electric race was not simply a PR exercise. In fact, its aim was
to bring attention to the company’s commitment to help contribute to a cleaner world by
reducing carbon emissions. Antofagasta is demonstrating this commitment in myriad ways,
not least by using renewable sources, including wind and solar, to generate 45 percent of its
power at its Los Pelambres mine.17
Creating a new image begin offering products over Mamba ores with higher
with customers which they can exercise more phosphorous Brockman
In addition to rebuilding control, particularly relative to ore, Rio Tinto created a
trust externally and among pricing. China’s new modern premium product to meet
employees, some companies steel furnaces, for example, the unique demands of steel
are trying to reposition are configured to run on mill customers. Since its
themselves in the eyes of their high quality iron ore and introduction into the market
customers by demonstrating met coal, encouraging steel roughly one decade ago, the
their capacity to deliver mills to favor higher grade Pilbara blend has become
greater value. As the industry iron ore. This is true across the world’s most traded iron
works to articulate its value commodities. China’s drive to ore product.18
proposition to shareholders, reduce emissions and improve
there’s been a collective soul the environmental footprint As mining companies continue
searching that has led, in some of individual processes will to remake themselves from
cases, to the development of underpin demand for higher the inside out, leaders will
differentiated, higher margin, quality raw materials. Similarly, likely focus more diligently on
proprietary products tailored India is structurally short of high understanding customer needs
to meet the needs of certain quality coal reserves. and developing boutique or
customer segments. niche products to meet them—
Some companies have already reaping the rewards of both
With economies moving taken steps to meet this improved customer satisfaction
along the urbanization demand by creating more and higher margins.
curve and demanding more differentiated products. Rio
sophisticated products, Tinto’s Pilbara blend is a case
miners may increasingly in point. By blending Marra
25

Enhance transparency and the development of disclosure. The technology
Companies have already healthcare programs. They required to do this may even
taken great strides to may also need to give key end up providing valuable
improve the transparency stakeholders an inside data companies can use in
of their tax disclosures. A look at their operations, decision–making.
similar spirit will likely need by empowering citizens to
to pervade a broader range monitor the quality of their Develop a crisis
of activities going forward. water outputs, for instance, or management response plan
Mining companies need to explaining the rationale behind Mining companies must
more clearly demonstrate changes in strategic direction continually work to educate
the role the industry plays in to employees at all levels of the their stakeholders about
supporting and sustaining company. the industry and keep
economic growth. Companies them apprised of corporate
must continue sharing Up efforts to build, activities. This means
examples of the efforts they measure, and report on staying ahead of the curve
are making to remediate sustainability by anticipating criticism and
any environmental damage While many governments now having a ready response. To
they cause. They must be require certain disclosures, repair reputations, mining
more proactive in sharing over–reporting shows a real companies must consistently
the impact they are making commitment to sustainability. be honest and upfront about
in local communities and Companies can only do this, any incidents and how they are
countries, not only in terms of however, if they invest in tools addressing them, even if they
employment, but in terms of that can help them report are only minimally involved.
infrastructure investments, consistently and with the
improved access to education, same rigor used for financial
06
26
Tracking
Trackingthe
thetrends 2017
trends 2018
Align operational decisions Work directly with

with stated commitments governments and
To shift public perceptions, communities
mining companies must Most large mining companies
walk the talk. This means already do this, but all miners
avoiding jurisdictions rife should meet regularly with
with bribery and corruption, key stakeholders before,
reducing safety incidents during, and after a mine is
and fatalities, and rigorously operational. This is about more
adhering to the most stringent than good optics. It is good
environmental practices business—and it will provide
possible. It may also mean companies with confidence
shifting corporate cultures in the face of criticism when
to ensure employees truly they know they are actively
prioritize the maximization of respecting and incorporating
value over the maximization the views of the communities
of production. To turn culture they operate in.
into a productivity lever,
mining companies should
seek out best practices from
organizations that already
understand that their real
assets are their people.
27
5
Transforming
stakeholder
relationships
The growing need to achieve
measurable social outcomes
To expand local employment Mounting volatility
opportunities, increase tax These demands are taking
revenues, and meet increasing various forms. In Russia, for
community demands for instance, community concerns
improved infrastructure around coal dust pollution may
and greater environmental result in a ban on the use of
protection, many governments grabbing cranes, which are used
of resource–rich countries by ports to load more than 50
continue to put pressure percent of Russia’s seaborne
on the mining industry. As a exports. If passed, these
result, mining companies in measures could see Russian
many jurisdictions still face coal exports fall by up to 80
considerable obstacles to million tons, dropping back to
investment, ranging from 2007 levels.19
high royalty rates, permitting
challenges, and uncertain tax
rules to growing requirements
for local beneficiation.
28
Stakeholder management in action

Diamond producer De Beers has been operating in Botswana since 1967, the year after the
country achieved independence. As part of a public–private partnership that has extended
over 50 years, the company entered a 50/50 joint venture with the government to form
Debswana, the primary producer of diamonds in the country. In recent years, De Beers
moved both its diamond sorting operations and its international sales function to Botswana.
An analysis of the partnership in 2014 showed that it employed almost 8,000 people, of
whom 96 percent were Botswana citizens, including almost 85 percent of management.
A further 12,870 jobs in the broader economy were supported through the partnership’s
supply chain contribution. In addition, the partnership spent approximately US$6 million on
550,000 hours of training and skills development for employees. Today, the partnership is the
largest single contributor to the Botswana economy, besides the government itself.24
In Colombia, the mining industry New approaches the mining industry remains a
has been beset not only by Although many of these major employer. Historically,
protests, road blockades, regulatory risks can be traced to the contract between mines
and new tax measures, but politically volatile jurisdictions, and communities has revolved
also by mining bans that have there may also be a secondary around job creation. As mines
forced some major miners underlying cause. Some of move towards more digital
to halt operations in certain the social initiatives mining operations, however, the basis
municipalities.20 El Salvador companies have undertaken in of this social contract will
went one step further, banning the past have failed to deliver shift. To prevent unrest and
mining entirely.21 on their intended results. mitigate backlash, companies
Increasingly, the industry will need to leverage the
In Tanzania, Acacia Mining was is coming to realize that its digital infrastructure on behalf
hit by a US$190 billion fine, traditional approaches to of communities, potentially
US$40 billion in unpaid taxes community and government using it to create new
plus an additional US$150 relations must change. education models, improve
billion in interest and penalties, communication, develop
prompting the company to This imperative will only suppliers, or deliver other
reduce its operational activity heighten in the digital age. digitally–enabled services.
in the country.22 The total bill Despite the benefits that This will require companies
represents roughly 40 times automation, robotics, and AI to be more creative in
Acacia’s 2016 revenues and deliver, their effect on local uncovering the real needs of
comes in at four times the size employment is bound to these communities.
of Tanzania’s GDP.23 spark government concern,
particularly in regions where
29
This isn’t to imply that transforming

key stakeholder relationships Stakeholder
will be easy. The mining industry management in action
as a whole has an inconsistent In 2016, Fort McKay First
performance record in this Nation made history by
space, one hampered by the entering a participation
considerable challenges associated agreement with Suncor
with reaching consensus across for the purchase and sale
multiple stakeholder groups. If of a 34.3 percent equity
mining companies truly hope to interest in Suncor’s East
change for the better, they must Tank Farm Development,
do more than create stakeholder valued at approximately
maps in the various markets US$350 million.25 This
where they operate to identify example of communities
key decision makers and potential taking a major equity
detractors; partner with industry stake in an organization’s
and trade groups to gain a more operations highlights the
intimate understanding of the local potential of partnerships
political climate; and build targeted to not only earn a social
relationships with specific political license to operate but to
entities, community leaders, NGOs, bring sustained value to
and agencies to uncover pressing local parties.
local needs. They must also create
a stronger sense of shared value
with both local governments and
local communities. This means
moving beyond the unilateral
actions companies typically
adopt (such as donations and
philanthropy, preferential hiring,
and legal compliance) to embrace
more collaborative modes of
engagement designed to get local
communities more invested in the
mine’s operations.
30
“If there’s one area where the industry needs to both

collaborate and innovate, it’s around how it deals with
communities and governments. It’s time for miners to
change the lens on stakeholder management. Rather
than approaching it as a cost of compliance,
companies must determine how to make a concrete
social impact that inures to the benefit of different
stakeholder groups.”
Andrew Lane
Mining Leader
Deloitte Africa
31

Move beyond financial Strengthen local however, some companies
transparency supply chains are democratizing this
In recent years, many Local businesses often process through the use of
regulators and NGOs have lack the scale to deliver community–led evaluations.
demanded enhanced on large procurement By focusing on greater
disclosures, prompting mining contracts, putting them at a transparency between the
organizations to heighten competitive disadvantage. To mine and local communities,
their financial transparency in overcome this barrier, some companies can empower
an effort to demonstrate the organizations now focus communities to select and
contributions they are making on systematically helping track the metrics that matter
to local governments and local partners gain the skills to them most.
communities. Unfortunately, they need to participate in
it is becoming clear that the procurement process Collaborate
numbers alone don’t tell a through business development Collaboration, both among
compelling story. As such, it training, mentoring, and adjacent mine operators
would likely compel companies formal suppliers development and through public–private
to provide more concrete programs. Mining companies partnerships, can help mining
examples of how their that support this type of companies meet critical public
investments and activities strategy can realize cost and community needs while
translate into measurable savings by reducing reliance also enhancing operational
social outcomes—such as a on global suppliers who performance. While
certain percentage increase must fly in and out of regions collaborative approaches
in local employment or around the world to meet will hinge on specific project
the number of workers the company’s needs. For goals, common success
successfully transitioned to their part, local supplier factors typically include
new jobs following a mine gain access to the processes building a multi–disciplinary
closure. Rather than an and technologies they need team committed to working
information dump, it’s time for to grow, enabling them to closely with industry
companies to share messaging become strong players in the stakeholders, engaging
that paints a picture of what local market. At the same multiple stakeholder groups,
their numbers mean. time, this approach can deliver and starting negotiations as
outsized economic benefits early as possible given that
Provide communities with for host countries, creating the timelines associated with
equity stakes both direct and indirect jobs, these types of projects can
To encourage communities to enabling the transfer of skills frequently span years.
be more vested in local mines and technology, strengthening
and developments, it may business networks and
make sense to provide them industrial clusters, and
with significant equity stakes increasing tax revenues.
in mining company operations.
In addition to strengthening Enable community–led
companies’ social license to evaluations
operate, this approach allows Traditionally, organizations
communities to realize long– monitor their behaviors to
term financial advantages tied ensure legal compliance
to corporate fortunes, building and determine their impact
a true sense of shared value. on local communities. Now,
06
32
From left field

Blockchain
Growing reliance on data in the mining
sector introduces the potential to use
blockchain technology to create fully
transparent, secure, and traceable
transaction histories. Blockchain is
often thought of for finance applications
like enhancing accounts payable (AP)
processes by eliminating the need to
reconcile purchase orders (PO) and
invoices or streamlining trade finance
by supporting the creation of smart
contracts to automatically execute
payments. But could it be used to
create new value for communities? Take
Canadian start–up Peer Ledger26 as an
example. Using blockchain technology,
the company can track precious metals
through the supply chain to ensure they
were derived from ethical sources and
do not include conflict minerals. Just as
organizations like Fair Trade impacted the
coffee industry, it’s not a far stretch to
think through ways in which blockchain
enabled solutions could transform the
relationship with mining companies
and communities.
33
6
Water
management
Finding sustainable solutions
to a pressing issue
With each passing year, water expected to worsen. Currently,
has become a more critical over 1.7 billion people live in
issue for the mining sector. As river basins where water use
ore grades decline, more water exceeds recharge and, by 2050
is needed to extract the same at least one in four people
amount of ore pushing up water are likely to live in a country
requirements in the industry. At affected by chronic or recurring
the same time, water demand freshwater shortages.27
is rising globally, driven by
population growth, industrial As concerns around water
development, expansion availability grow, communities
of irrigated agriculture, and environmental groups
and increases in per capita are turning the spotlight on
water consumption. water–intensive industries,
including mining. In fact, since
Critically, this growing demand 2000, roughly 58 percent
is not offset by available supply. of the mining cases lodged
According to the United Nations with the World Bank Group’s
(UN), water scarcity now Compliance Officer have related
affects more than 40 percent to water issues.28
of the global population and is
34
New approaches needed “…ethical water stewardship is

Water scarcity is not the only expected increasingly to emerge
issue mining companies face. as a competitive advantage for
In some regions, floods, ice those operators that get it right.
melt, and severe storms have For those that do not, their
the potential to create excess ability to maintain their social
water, increasing the risk of license to operate may come
effluent leakage. In 2015, for into question.”31
instance, heavy rainfall in
Vietnam deluged the roads To reduce freshwater needs,
with potentially toxic floodwater mining companies are already
runoff from 16 open pit coal investing in process innovation,
mines and three coal–fired wastewater recycling, and
power plants.30 digital monitoring. They are
collaborating with commercial
In light of these challenges, technology providers to
mining companies must devise solutions for tailings
enhance their approach to storage and management, dust
water management. This means suppression techniques, and
finding more innovative ways to seawater desalination plants.
reduce, reuse, and recycle water They are also increasingly
in water–scarce regions; contain collaborating with governments
and treat wastewater to prevent and other industry players
spillage or contamination of to devise a shared water
downstream water flows; and use approach to available
monitor their water usage and water resources.
purity. As BHP recently noted,
Approximately 25 percent of mining production will

be vulnerable to climate–related risks such as water
shortages by 2030.29
35
Water in the spotlight

These action items are Water management in action
becoming particularly important In keeping with its goal to catalyze innovation by
given the growing regulatory connecting the whole mining ecosystem, the Canada
focus on water management, Mining Innovation Council (CMIC) is working to transform
spurred, at least in part, by mining into a zero waste industry. As part of its
serious disasters. environmental stewardship initiative, the organization
provides companies with online access to 15 million
Regulatory pressure is even water quality data points in a geospatial format in the
mounting in regions where hopes that the portal could ultimately be used to curate
water management has or provide water quality monitoring data for regulatory
been traditionally less rigid, reporting purposes.32
mandating companies to adopt
best practice approaches
wherever they operate or face
serious penalties.
Water management in action
Although approaches will differ In a notable example of intra–sector collaboration, Anglo
depending on the regions American and BHP teamed up in 2007 to build South
where they operate and the Africa’s eMalahleni Water Reclamation plant. This was
water challenges they face, one the world’s first facility to treat acid rock drainage (which
thing is clear, mining companies can contaminate aquifers and river systems) and purify
need a sustainable water it to potable standards. The revenue generated from the
management strategy if they sale of water to BHP and the local municipality offsets
hope to thrive into the future. 60 percent of the operational cost for Anglo American.
The plant also meets 12 percent of municipal daily water
requirements and generates roughly 30 million liters per
day. Other companies and municipalities in water–stressed
areas are now replicating this effort.33
36
Water management in action

Goldcorp is engaged in a multi–year strategy designed
to move the company towards zero water use. By
substantially reducing freshwater consumption and
eliminating the use of traditional slurry tailings, the
company currently aims to consume 50 percent less water
than its existing sites do today and move at least half of its
existing operations to water reuse/recycle rates of more
than 80 percent. To give this initiative a worldwide impact,
Goldcorp is also sharing its information and best practices
with other industry leaders.34
“Mining companies understand how much water they

use. Yet this understanding does not always translate
into action. To address community concerns around
resource competition, it’s time for miners to improve
their water management by rethinking their production
processes and partnering with technology companies
to implement real–time water monitoring solutions.”
Karla Velásquez
Mining Leader
Deloitte Peru
37

Conduct a water risk Use digital technology to done using the ore’s natural
assessment manage water use moisture; substituting raw
Risk assessments allow New technologies give seawater for freshwater;
companies to gain a clear companies the ability to treating generated wastewater
understanding of the risk monitor the quantity of with technologies such as
factors associated with their their water intake in real reverse osmosis, ion exchange,
current water use, such as time, determine how much and membrane filters; and
impact on operations if local water is required for various using micro–organisms in
water levels drop or the mining processes, and track tailings facilities to mine
potential disruptions they the quality of the water mineral waste.
may face due to extreme they retain in their tailings
weather conditions. In facilities or release into the Take a shared value
addition to bolstering scenario environment. In addition approach to water use
planning, these assessments to enabling early detection Mining companies need to
can help companies identify of potential problems, this look at water through an
appropriate adaptation equips companies to be integrated water management
measures and internal controls more transparent about framework to determine
to mitigate potential risks. their local water impacts how to share this critical
and share critical data with resource among competing
Put a cost to water key stakeholders to better stakeholders. The aim is to
Water access costs are only drive engagement with ensure that downstream
the tip of the iceberg when communities, governments, water users are not negatively
it comes to assessing the full and special interest groups. affected by decisions made
price of water. In an age of by upstream players. This
water scarcity, it is becoming Rethink traditional requires companies to
imperative to price water on mining processes take water use across the
a full cost basis, taking into Companies that are achieving catchment into account and
account not only its access true innovation in water work with key stakeholders—
cost, but also the costs management tend to take including governments,
associated (for instance) with regional factors into account water authorities, and
its treatment and chemical before a mine is ever communities—to set
alteration, to monitor built. This has seen some targets for water use,
wastewater or tailings facilities companies adopt increasingly effluent treatment, and
over the course of decades, innovative water management discharge rates.
and to build treatment or approaches, including dry
desalination plants. processing, where mining is
06
38
From left field

As technological progress
continues apace, it may
ultimately be feasible to
operate a mine without
any water. Already,
wastewater reclamation
allows some miners to
vastly reduce freshwater
use. Going forward,
innovative technologies
and approaches may help
companies create mines
with a zero water footprint.
That would have significant
implications for operating
in water constrained
environments.
39
7
Changing
shareholder
expectations
Investors demand greater
accountability
For decades, mining company This more rigorous oversight
behavior largely hinged on is manifesting in a number
prevailing market realities. of ways. In some cases,
While lower commodity shareholders are making it
prices traditionally heralded clear that they expect a return
retrenchment, cost cutting, of value as corporate fortunes
and risk aversion, a rising price rise—in the form of increased
environment often signaled dividends, share buybacks,
a period of over–spending, and a higher total return to
sometimes to the detriment shareholders.
of long–term corporate
value. So with commodity
prices on the uptick, it’s no
surprise that shareholders
and institutional investors are
carefully monitoring the sector
to assess if companies are in
danger of once again tipping
towards excess.
40
In other cases, shareholders mergers and acquisitions (M&A), in the short term, it does raise
are becoming more vocal by in light of the fact that average concerns around potential
engaging in activism in a bid to total shareholder returns from supply shortages. Which begs
influence operational decisions. gold mining investments were the question, is the traditional
In the summer of 2017, for negative 65 percent since 2010 corporate governance model
instance, Elliott Advisors began during a time when the gold based on shareholder returns
campaigning for changes to price rose by 20 percent.38 appropriate for a cyclical sector
BHP’s strategy and board, like mining? Some say no.
pointing to missteps that saw In some jurisdictions, activist
the company’s US$30 billion shareholders have also begun A recent Harvard Business
investments in US shale fall voting against the executive review article39 pointed out that
in value to US$6.5 billion.35 In remuneration reports the maximization of shareholder
an attempt to influence BHP presented at the annual general value only became a goal for
to sell its US shale business, meeting. This is not necessarily shareholders and boards fairly
the activist fund increased its because they are opposed to recently. The concept arises
stake in BHP to an estimated the proposed remuneration, but from the “agency theory”, which
five percent, giving it the as a way to force reconstitution posits that shareholders own
right to call an extraordinary of the board of directors. the company and that their
general meeting or table a primary objective is to maximize
shareholder resolution.36 The dangers of their own economic returns.
short–termism The issue with this assumption
Similar activism appears As shareholder expectations is that shareholders have no
alive and well among grow, mining companies legal duty to protect or serve
smaller companies too. At have begun focusing on re– the companies they invest
Petropavlovsk, a London–listed establishing their credibility in. This gives certain types of
gold miner, the chairman in the investor community shareholders the power to
was recently voted off the and with analysts. Rather force the change of a company’s
board following shareholder than pursuing mega–mergers board or management, only to
opposition.37 And in September or building new mines, sell out as soon as the share
2017, New York–based hedge for instance, many are price rises. The article’s authors
fund manager Paulson & Co exercising higher degrees argue that this form of activism
called for the world’s biggest of fiscal discipline. is less about value creation and
investors in gold mining stocks more about value transfer.
to form a coalition to speak out Of course, while this
on issues such as executive conservatism can help to
pay, board constitution, and bolster shareholder returns
41
Ira M. Millstein, founding Instead of buying into the While this argument should not
chair of the Ira M. Millstein traditional model of corporate absolve mining companies from
Center for Global Markets governance, it may make being called to task on their
and Corporate Ownership at better sense to acknowledge poor track records, it can help
Columbia Law School, author that corporations need to counter the negative effects
of The Activist Director, and create value for multiple often associated with an overly
Senior Partner at international constituencies—including short–term investor outlook—
law firm Weil, Gotshal & Manges customers, employees, which include the danger
LLP, holds a similar view. suppliers, and communities— of overlooking innovation,
At a recent presentation in not just for shareholders. exploration, and sustainable
Toronto, he noted the dilemma Their performance measures growth in favor of boosting
directors face in responding to should consequently reflect quarterly share prices. Boards
shareholder expectations, given these varied objectives. This that successfully steer the
the divergent expectations would free up boards to focus market’s focus towards long–
of long–term shareholders, more on long–term strategies, term strategy can help limit
short–term shareholders, succession planning, and the effects of focusing on the
hedge funds, mutual funds, leadership development, while short term.
and institutional investors. In linking executive compensation
his opinion, it is incumbent on to broader corporate goals—
directors to ensure that activist including those related to good
shareholders actually represent corporate citizenship and
the interests of all shareholders ethical behavior.
before meeting their demands.
“When confronted with an activist shareholder,

directors need to figure out if that shareholder’s
interests align with those of the larger shareholder
constituency. If so, they should listen to the activist’s
idea. If not, however, they should vote against—even
if it costs a quarter of earnings.” 40
Ira Millstein
Founding chair of the Ira M. Millstein Center for Global Markets and
Corporate Ownership at Columbia Law School, author of The Activist
Director, and Senior Partner at international law firm Weil, Gotshal &
Manges LLP
42
“Responding to rising shareholder
expectations requires companies
to walk a fine line. While it is
important to avoid decisions that
can result in an erosion of value,
shifting corporate direction to
meet shareholder demand for
short–term returns can work to
the long–term detriment of
the company.”
Tim Biggs
Mining Leader
Deloitte UK
43

Commit to greater Adopt a longer–term
transparency governance model
Mining companies can only Rather than prioritizing
hope to win back investor shareholder returns over all
confidence if they consistently other corporate objectives,
demonstrate an ability to it may be helpful for mining
deliver on their promises. This companies to move towards
requires companies to improve a model that recognizes
their forecasting, project the breadth of functions
management, and reporting they serve in society—from
abilities so they can adhere generating shareholder wealth
to their publicly–articulated to providing employment,
policies around capital paying taxes, and contributing
allocation and consistently to local communities around
meet their earnings forecasts. the world.
Shine a spotlight on activism

While shareholder activism
can shed a light on instances
of corporate misconduct,
the interests of activist
shareholders may not always
align with the interests of all
shareholders. In these cases,
it is incumbent on boards to
disclose the pertinent details
of any potential conflict so
that shareholders at large
can make more informed
voting decisions.
06
44
Tracking
Trackingthe
thetrends 2017
trends 2018
From left field

In recent years, the move
towards green investing has
impelled many pension funds
and investment managers to
reduce the number of mining
companies in their portfolios.
This stance, however, is now
being called into question
given the mining industry’s
role in supplying raw
materials for electric vehicles,
which are expected to have
a beneficial effect on the
environment. Going forward,
renewable energy and
sustainability benchmarks
may need to expand to
include mining companies
if they are to reflect the full
value of the electric vehicle
supply chain, a move that
could vastly shift shareholder
perceptions of the industry.
45
8
Reserve
replacement
woes
Changing public, employee,
and customer perceptions
Thanks to intense cost cutting, Ongoing grade decline,
a focus on fundamentals, and resource depletion, and supply
a commitment to portfolio disruptions are resulting in a
simplification, the fortunes of similar trend for copper, which
many mining companies are on is expected to fall into a deficit
the rebound. Yet this tentative by 2018.43
turnaround cannot remedy
the supply constraints that For the first eight months
currently plague the industry. of 2017, silver production
had fallen by a significant 20
For the 10 years prior to 2016, percent in Chile and 19 percent
the amount of gold discovered in Australia,44 while nickel
declined by 85 percent, while entered its first material deficit
reserves have fallen by 40 since 2010.45 Recent under
percent since 2011,41 prompting investment in zinc also pushed
Randgold Resources’ CEO that commodity’s inventories to
to warn that, by 2020, the their lowest levels since 2007.46
industry will face a dramatic
supply shortage.42
46
Figure 3: Share of 2016 global colbalt production
64%
6% 6.25% 5%
4.15% 3.40% 3.75%
0.56%
US Australia Canada China DRC Cuba Russia Zambia
Source: Wealth Research Group 47
Cobalt supply shortages are while currently on the to exploit new resources. At
also often in the news, with upswing, have declined sharply the same time, they remain
companies struggling to find since their peak in 2012 (see extremely hesitant to engage
conflict–free sources of the figure 4). Exploration budgets in acquisitions to feed the
metal outside of the Democratic are also down (see figure 5). exploration pipeline.
Republic of the Congo (DRC),
where 60 percent of the world’s Yet these are not the only Competitive pressures may
current supply is located48 factors contributing to supply also play a role in limiting future
(see figure 3). shortages. Still burdened with supply. In recent years, for
high debt loads and rising price/ instance, the three major iron
Constrained supply earnings (P/E) multiples, mining ore suppliers have improved
Some of the reasons for this companies are struggling to efficiencies to such an extent
reserve depletion are well free up the exploration and that new suppliers are being
known. Capital expenditures, development budgets required priced out of the market.
Figure 4: Mining capex Figure 5: Exploration budgets by stage

of development and world totals
$B
70 60 25
60
50
20
50
40
40 15
30
30
10
20
20
10 5
10
0 0 0
1997
2000
2001
2002
2004
2005
2006
2007
2008
2009
2010
2011
2012
1013
2014
2015
2016
1998
1999
2003
2020E
2017E
2018E
2019E
2016
2014
2015
2012
2013
2010
2011
2008
2009
2005
2006
2007
Sustaining capex Growth capex Early stage Late stage Minesite
Source: Barclays European Metals & Mining report, released Source: S&P Global Market Intelligence
in March 2017.
47
Arguably, this trend could 15 percent of Polyus, Russia’s for instance, Goldcorp and
extend to other commodities, largest gold producer—marking Barrick Gold entered a 50/50
impelling major players to drive the first big Chinese investment joint venture to work together
efficiencies and ensure low in Russia’s mining industry.50 to develop several gold mines
cost production by acquiring in Chile’s Maricunga belt.51 For
competitors. If niche players However, despite this activity, their parts, both Newcrest
begin to dominate certain mining companies are eager Mining and AngloGold Ashanti
market segments, the future to avoid the losses they both teamed up with junior
of diversified miners could be experienced in the past, when explorers to expand their
called into question. industry M&A often proved to exploration pipelines.52
be value destructive. As a result,
Too little, too late? they are now making smaller, Yet concern remains that these
Admittedly, the transactional more conservative investments measures may be too little, too
environment is gaining steam, accretive to shareholder value late. Without a concerted focus
with some M&A returning. rather than engaging in major on reserve replacement—and
Significantly, Chinese investment transactions and going full tilt the dedication of significant
in key commodities appears towards building new mines. investment funds—the danger
to be resurging. In April 2017, They are pursuing earlier stage of falling into a historical boom
Shandong Gold acquired a 50 exploration projects; looking and bust mentality remains real.
percent stake in Barrick Gold’s for grassroots investments
Veladero mine in Argentina in a rather than engaging in major
transaction valued at just under takeovers; and entering joint
US$1 billion.49 This was followed ventures to uncover new
by a June 2017 deal involving deposits and share the costs
a consortium led by Fosun, and risks of new project
which agreed to acquire up to development. In March 2017,
48
New approaches in action

To position itself for future growth and gain a competitive
advantage, Rio Tinto has committed to managing its
asset portfolio more actively. To this end, it set up Rio
Tinto Ventures to gain access to commodities that are
set to benefit from megatrends, such as industrialization
and urbanization, technological disruption, and the
interconnection of global markets. Rio Tinto Ventures aims
to enter joint ventures and partnerships with asset owners
where its engineering excellence, sales and marketing
channels, and technical expertise allow it to add value.
The company hopes these investments will position it to
uncover new greenfield opportunities in partnership with
junior miners.53
“Going forward, mining companies will need to find a

more agile way of replacing reserves, one that allows
them to engage in exploration and development
without sinking in large amounts of capital for long
periods of time.”
Kevin Xu
Mining Leader
Deloitte China
49

Shorten the cycle typically prefer to invest in choices about which assets
To reduce the risk of long– near–mine exploration in to buy or sell, and when. Too
cycle megaprojects, resource known geologies. This focus, often, these decisions hinge on
companies often engage in however, may hamper their subjective factors that cannot
short–cycle projects designed ability to succeed in emerging be effectively measured or
to rapidly generate a positive nations. To overcome this improved. To remove some
cash flow. In addition to hurdle, a new kind of investor of that subjectivity, leading
reducing capital expenditures, may be required—one organizations are increasingly
these short–cycle investments who understands the risks, relying on data analytics
help to preserve the production regulatory environment, and to rank and score potential
capacities needed to expand cultural issues that prevail in investment opportunities.
as demand factors shift. less developed regions and is Properly implemented, these
Canada’s IAMGOLD strategy consequently willing to inject analytical tools can help
has been focused on both long local capital into the sector. mining companies improve
and short-cycle projects. The their financial models,
short-cycle project approach Consider more creative uncover new business
has been considered by the funding models opportunities, and make more
company for several years to In a bid to become more nimble intelligent investment and
achieve sustainable reserve operators, mining companies divestment decisions.
growth by focusing on are on the lookout for more
identifying near-mine deposits creative funding models that Leverage new technologies
that can lead to more greenfield may not require investors As geomatic technologies
discoveries. In addition to to commit large amounts of evolve, companies have begun
enabling the company to capital for long periods of to develop more advanced
transform its balance sheet, time. This is spurring a rise in surveying capacities. New
this approach has also alternative funding approaches, mobile technologies now allow
positioned it to profitably grow such as supply chain financing, for portable laser scanning;
production by 20 to 25 percent streaming arrangements, and remotely controlled drones
in the next three years.54 royalty agreements. Deals are delivering high resolution
involving underperforming aerial images; and satellite
Build a portfolio of early assets have similarly seen imagery is being used to detect
stage projects a trend towards nominal new ore bodies. Advanced
To expand their exploration purchase price structures, software solutions, such as
pipeline, several mining deferred consideration, MineRP, even allow companies
companies have been entering contractual royalties, and seller to consolidate all the available
joint ventures with junior commitments to fund ongoing spatial information in the
explorers. In these types of project expenditures in return mining environment to
deals, majors typically offer for buyers accepting take– establish detailed mine
to share intellectual property or–pay obligations in respect plans and schedules, and
(IP), engineering resources, of rail and port access and shift mine design fluidly
technical expertise, and environmental liabilities. as internal and external
exploration costs with juniors factors change—improving
in exchange for first rights to Use analytics to optimize planning and workflows, while
new mineral discoveries. portfolios optimizing budgets.
One of the greatest difficulties
Find local capital organizations face when
To avoid undue risk, blue trying to structure optimal
chip mining companies portfolios is making informed
06
50
Tracking
Trackingthe
thetrends 2017
trends 2018
From left field

Mining companies are no strangers
to the boom and bust cycles typically
associated with shifting commodity
supply and demand. Yet this familiarity
may be the very thing that makes it
difficult for them to devise truly novel
operational approaches. Other less
progressed industries have fallen prey
to this trap in recent years—making
them ripe targets for unanticipated
disruption. Which begs the question:
could a company like Amazon buy
into the mining sector with the aim
to uncover hidden opportunity? The
idea may not be as far–fetched as it
seems, particularly as the line between
mining companies and technology
companies blurs. As the digital mine
becomes a reality—and mining
companies increasingly embrace AI,
advanced data analytics, drones,
autonomous machines, and cognitive
computing—technology companies
could move up the value chain in
search of the uniquely high margins
that can be generated from owning,
extracting, and marketing minerals
and metals.
51
9
Realigning
mining boards
New skillsets are needed to
help drive transformation
There is little doubt that the These drivers and more make
mining sector is in the midst of it clear that companies will
a transformation. To transition need to make substantive
to the mine of the future, cultural shifts.
companies must embrace the
full power of digitization and Some companies have already
innovation and attract a new taken steps in this direction by
brand of talent. Heightened engaging in cross–functional
scrutiny from governments, collaboration, seeking out best
communities, investors, practices from other industries,
and other key stakeholders strengthening their executive
mandates new forms of teams, and setting targets
cooperation and collaboration. to achieve greater diversity
To repair broken relationships and inclusion.
and tarnished reputations,
miners must also explore ways
to operate more sustainably.
52
To cement these changes, Critically, boards mired in literacy so they can ask the
however, mining companies will old ways of thinking will right questions about the
also need to ensure that their increasingly struggle to fulfil company’s technological
boards are properly constituted this mandate. Although past transformation and understand
to support transformation. experience can help inform the answers they receive. They
From a governance perspective, opinions, it can also inhibit will need to be well–versed
boards can only help drive the directors from questioning in new compensation and
changes the industry needs if their current assumptions— incentive structures so they
they are comfortable embracing leading to a form of cognitive can effectively guide and review
new operational realities— bias that prevents them from executive performance. They
including the need to operate considering non–traditional must learn about prevalent
in an ecosystem, transform solutions. Low levels of diversity talent constraints so they
stakeholder relationships, and among mining board members can help develop effective
weigh the pros and cons of only complicate the issue by succession plans. They should
novel business models. This is limiting their ability to uncover understand how to assess
especially critical as shareholder outside views or challenge their the effectiveness of corporate
activism ramps up, companies habitual thought processes. In cybersecurity strategies,
are held to higher standards essence, diverse perspectives particularly as cyber breaches
of corporate governance, and are necessary if mining boards become more prevalent. They
technological disruption alters are to effectively challenge also need to understand how
industry dynamics. organizational assumptions, to exert greater governance
assess the validity of new ways and oversight over the major
Rising expectations of thinking, and help determine construction projects that
While there was a time when if the organization is taking will increasingly be required
directors were predominantly on too much risk, or perhaps as companies work to
focused on oversight, this not enough. replace reserves.
notion is also shifting. Today,
directors are increasingly New skillsets, broader
expected to weigh in on outlooks
corporate strategy, digital To help evaluate the strategic
disruption, talent management, decisions mining executives
and emerging risk factors. In must make to transform
fact, studies show that the operations, it is becoming
best boards go beyond their clear that board members will
fiduciary responsibilities to require different skillsets. While
take a more active role in they may not need to be digital
constructively challenging the experts, directors will have to
executive team.55 improve their technological
53
As mining companies work to drive address solutions. By approaching

the transformation agenda, they diversity in this way, organizations,
will also require board members and their boards, can avoid the
capable of imagining a new future risk associated with homogeneity
rather than adhering to the and promote a new model of
practices of the past. This speaks inclusion. After all, a significant
to the need for greater diversity body of research shows that
among boards of directors. diverse teams are more innovative
and perform at higher levels.56 By
The key here is to blend the visible composing more diverse boards
aspects of diversity—such as of directors, companies can reap
race, gender, age, and physical the benefits of new ideas, more
ability, with diversity of thinking. debate, and, ultimately, better
This means deriving value from business decisions.
people’s different perspectives on
problems and different ways to
“Mining companies are considering new business

models and driving step change through innovation
and digitization. To enable this broader transformation,
they need the right board composition. Rather than
having a firm grasp of how things were done in the
past, today’s board members need to understand
how the industry is evolving into the future.”
Amy Winsor
Mining & Minerals Consulting Leader
Deloitte US
54

Create a vision for which can make for a small Review board
transformation pool of female candidates. refreshment policies
Before corporate boards It’s further limited by the fact To ensure they are capable of
can be properly constituted that women with boardroom overseeing evolving strategies
to support mining company experience are often over and risks, well–run boards
transformation, the subscribed and don’t have time typically adopt an ongoing
management team must first to serve on additional boards. approach to refreshment. This
articulate a clear vision for To overcome these challenges, means regularly assessing
the future. The aim is to then boards should look beyond the board’s composition;
realign the board’s skillsets, mining, to industries that are considering the average and
committees, and processes to already advanced in some range of tenure; reviewing the
ensure it is properly composed of these transformational board’s size and committee
to achieve that vision elements. They may want to structure; and ensuring
for transformation. look beyond the top corporate the board has access to
officers for candidates and give appropriate skills, expertise,
Look for board members them mentoring to help them experience, and diverse
with a broader set of succeed in the boardroom. The representation. Rather than
attributes adoption of an explicit policy relying on only age limits
While board members are to increase board diversity is to allow for refreshments,
frequently selected based also an important factor, as is leaders also establish a more
on their functional industry a more proactive approach to proactive process, by engaging
experience, mining companies promote women into executive in full board self–evaluations
can benefit by broadening the positions so they can develop and even conducting peer
attributes they seek out, with the experience they need to evaluations of individual
the aim of attracting directors join a board. directors to ensure the board
with more varied demographic continues to attract and
backgrounds (e.g., gender, Invest in board training cultivate the best candidates.
race, ethnicity, generation/ Board members must walk
age) and wider bases of a fine line between fostering
knowledge (e.g., people with a collaborative environment
expertise in technology, with senior executives while
cybersecurity, global risk still challenging management
factors, transactional success, by asking hard questions. To
performance management). help them find this balance, it
can be useful to ensure that
Be creative board members understand
Most boards seek directors corporate governance best
who are either current or practices both within and
retired C–suite mining officers, beyond the mining sector.
05
55
10
Commodities
of the future
Predicting tomorrow’s
disruptors
Given how inextricably The battery
socioeconomic trends link to As economies mature and
commodity demand, mining technological advancement
executives have long had to progresses, mining companies
double as futurists. To assess are seeking greater exposure to
which commodities to invest later–stage commodities such
in, and which to divest, miners as tech metals and boutique
need to keep their fingers minerals. One of the most
on the pulse of fluctuating frequently cited examples
consumer demands, global these days is lithium, an
demographic and economic integral component of battery
shifts, and the effects of technology. In anticipation
environmental change. In recent of the exponential growth
years, they have also had to of electric vehicles (EVs) and
track a rapidly–evolving trend, energy storage systems, the
the emergence and adoption of global battery supply chain
new technologies. is mobilizing.
56
By 2030, for instance, Western Australian and Canada, comes from the DRC.67 This
members of the Electric 70 percent of the world’s may explain why there are
Vehicle Initiative (Canada, known lithium reserves are in few dedicated producers.
China, France, Germany, Japan, Argentina, Bolivia, and Chile, In fact, roughly 95 percent
the Netherlands, Norway, the so–called lithium triangle.62 of cobalt is produced as a
Sweden, the UK, and the US) While a number of companies by–product (largely of nickel
plan to increase the market are focused on that region, or copper),68 so when those
share for EVs in their countries several lithium projects have markets deteriorate, cobalt
to 30 percent.57 According faced delays due to technical production falls.
to the International Energy problems, while lead times for
Association, 14 countries have new capacity can be four to On the plus side, both nickel
already announced quantitative five years. This environment and copper are re–inventing
targets for EV adoption, has created a very positive themselves as commodities
supported by subsidies dynamic for lithium prices, of the future as well. EVs
and significant investment which rose by over 70 percent are expected to contain
in charging infrastructure. between November 2016 and four times as much copper
Collectively, this is expected to November 2017.63 as combustion–powered
result in up to 20 million EVs on engines,69 driving analysts to
the road by 2020.58 Graphite is another commodity predict that the market will slip
currently in the spotlight. Like from a surplus into a deficit
Tesla alone, at its Nevada lithium, its demand is linked of 130kt by 2018.70 Similarly,
Gigafactory, is already to battery power and storage, while nickel laterites (nickel
producing more battery driving analysts to predict that pig iron and ferronickel) make
capacity than in any one single demand for battery-grade up the majority of today’s
plant elsewhere in the world, graphite will triple by 2020.64 production and will likely remain
with an annual capacity of 35 While China supplied just under in oversupply, demand for nickel
gigawatt–hours (GWh).59 Yet, 70 percent of the graphite sulfides (battery–grade nickel) is
surprisingly, that amount may used in 2016,65 rising costs, expected to increase 50 percent
be overshadowed by China, grade depletion, and stricter to three million metric tons
which plans to build additional environmental regulations may by 2030.71
factories by 2021 with the see the country’s share of the
capacity to produce more than market drop. The impact of these trends
120 GWh per year.60 on the mining industry can
For its part, cobalt—yet another be transformative.
In light of these factors, most integral component of battery
analysts predict that global technology—is facing a global
demand for lithium will double supply deficit that may grow
or even triple by 2030.61 The from 885 tons in 2018 to 5,340
key now will be meeting that tons in 2020.66 To complicate
demand. Although supply matters, almost 70 percent
of lithium is growing in both of the world’s cobalt supply
57
Waning fortunes Yet coal is not alone. Consider,

On the other hand, not all for instance, the implications
emerging megatrends will of recycling on commodity
increase commodity demand. demand. Already, the US
Shifting global factors may also produces over 70 percent of its
cause certain commodities to steel from scrap metal, reducing
fall out of favor. Thermal coal demand for iron ore. Conversely,
is an often cited example as China only produces 11 percent
countries around the world of its steel from scrap. As that
inexorably move towards rate picks up, the risk to iron ore
renewable energy sources. Over is bound to rise. In 2016 alone,
160 countries and counting China generated a record 143
have publicly announced million tons of scrap steel, an
commitments to increase amount expected to rise to 200
the share of renewables in million tons by 2020.75
their electricity mix,73 with 59
countries planning to shift to
100 percent renewable energy
in the coming decades.74
The future in play

Planetary Resources is a privately–owned US company
financed by a number of industry–launching visionaries
who see the mining of space resources as a potential trillion
dollar opportunity. They are particularly focused on near–
earth asteroids (NEAs), which are easiest to access and are
estimated to contain over 42 trillion tons of resources. NEAs
represent a potential mineral resource at least 50 times
larger than the earth’s entire iron ore reserve.72 Planetary
Resources has successfully launched two spacecraft into
orbit (2015, 2018), demonstrated its technology in Earth-
bound mining operations, and is aiming to launch the first
commercial Space Resource Exploration Mission by 2020.
58
Wealth from waste “Looking back just 20

Already, the pervasiveness of
years, it would have been
technology means that each
person generates roughly six to inconceivable to imagine
seven kilograms of electronic that nickel, lithium,
waste a year—and only 10 to 12
cobalt, and graphite
percent of that waste is recycled
on an annual basis.76 This likely would be powering
explains why some believe batteries. If mining
the global metal recycling
companies want to get
market will grow to US$406
billion by 2020, at an estimated ahead of the trends likely
compound annual growth rate to emerge 20 years from
of 7.95 percent.77
now, they truly need to
Tracking the trends delve deeply into
Given the pace of change, emerging market
making predictions about the
disruptors.”
commodities of the future is no
easy task. There is little doubt,
however, that it heightens Andre Joffily
the imperative for mining Mining Leader
companies to diligently track Deloitte Brazil
evolving market forces, while
also potentially developing
the skills to mine and process
a range of different, and less
familiar, ores.
59

Keep an eye on disruptors Explore scenario design
Disruption can be either One emerging forecasting
a threat or opportunity, approach combines human
depending on how it is intuition with AI to enhance
managed. For mining organizational ability to
companies, turning disruption develop future–oriented
into opportunity requires the strategies. By comprehensively
cultivation of a long–term evaluating external risks
view capable of assessing how and their implications,
emerging market trends may organizations gain the ability
affect the demand for specific to turn risks into opportunities.
commodities. To uncover By monitoring market
these often unanticipated developments, companies can
market shifts, it can be also devise more robust and
helpful to keep tabs on the flexible business strategies.
places where disruption
frequently emerges, such Go in prepared
as the start–up community, Although the commodities of
within business incubators the future could potentially
and accelerators, and among represent a transformational
educational institutions. opportunity for mining
companies, organizations need
Look for vertical integration the capacity to differentiate
opportunities the reality from the hype.
As competition for the This goes beyond conducting
commodities of the future appropriate transactional
heats up among various due diligence before pursing
industry players (i.e., potential acquisitions. It
manufacturers of EVs, also includes assessing
batteries, electronics, and the viability of potential
new technologies), corporate market opportunities and
end users may try to secure the capabilities required to
their own sources of supply. capture them, and developing
Mining companies should keep strategic responses to both
abreast of these emerging short– and long–term changes
opportunities to potentially in the market.
partner with corporate end
users to secure development
funds or to enter direct–to–
customer supply contracts.
06
60
From left field

In identifying the commodities
of the future, mining companies
must keep track of a range of
disruptive market forces. One
of those may be the advent of
a viable deep space industry.
Since 2000, more than US$13
billion has been invested in
space–related businesses78 that
extend far beyond established
industries like satellites and
launchers. In fact, space may
ultimately support a commercial
market worth over US$37 billion,79
comprised of opportunities
such as manufacturing (the
low–gravity environment can
deliver significant productivity
improvements), space tourism,
and exploration support.
Although asteroid mining

still sounds like science fiction,
companies like Planetary
Resources are looking to mine
asteroids. The market potential
could be huge, one asteroid
(16 Psyche) is made up almost
entirely of iron, nickel, and rare
metals like gold, platinum, copper,
cobalt, iridium, and rhenium. The
iron alone is potentially worth
US$10,000 quadrillion.80
61
02
Out with the old, in with the new

Harnessing the winds of change
In 2009, when we first launched weathered years of market create new operational
this mining report, the global volatility have taken the lessons cultures, they are still battling
financial crisis was in full of the past to heart. Rather than against a tide of negative
swing. As commodity prices engaging in age old responses public perception, contentious
plummeted, many mining with the expectation of different stakeholder relationships, and
companies found themselves results, they have come to increasingly vocal shareholder
operating at the brink of a loss, understand that new times demands. Their test now will
driving much of the sector call for reinvented measures. be maintaining the resolve
into full retrenchment mode. In short, they are not simply to back up their words with
As a result, executives began reacting to external pressures. consistent, unwavering, and
refocusing on fundamentals Instead, they are adopting determined action.
such as cost containment, risk transformative strategies
management, and supply chain designed to help them change
efficiency. In essence, they were for the better.
repeating the acts so symbolic
of previous down cycles. Profound change takes time.
Despite mining companies’
Over the past decade, however, quest to use data as a
the mining industry has radically differentiator, enhance
transformed itself. Those innovation maturity, position
companies that successfully for the future of work, and
“Miners have finally realized that they cannot be islands unto themselves.
To effect lasting change, they must partner with each other to reduce
project risk, collaborate with external vendors to reconceive how they
operate, work more closely with governments to help inform policy,
and strengthen relationships with local community stakeholders.”
Rajeev Chopra
Global Leader – Energy & Resources
Deloitte Touche Tohmatsu
63
For more information, please contact a Deloitte mining professional:
Global contacts
Global Leader, Mining Global Leader, Energy & Resources
Phil Hopwood Rajeev Chopra
+1 416 601 6063 +44 20 7007 2933
pjhopwood@deloitte.ca rchopra@deloitte.co.uk
Region/Country contacts
Africa Australia Chile

Andrew Lane Paul Klein Christian Duran
+27 11 517 4221 +61 08 9365 7060 +56 22 729 8286
alane@deloitte.co.za pauklein@deloitte.ca chrduran@deloitte.com
Africa Brazil Colombia

Tony Zoghby Andre Joffily Julio Berrocal
+27 11 806 5130 +55 21 3981 0490 +57 5 360 8306
tzoghby@deloitte.co.za ajoffily@deloitte.com jberrocal@deloitte.com
Americas Canada France

Glenn Ives Phil Hopwood Damien Jacquart
+1 416 874 3506 +1 416 601 6063 +33 1 55 61 64 89
gives@deloitte.ca pjhopwood@deloitte.ca djacquart@deloitte.fr
Argentina Canada India

Edith Alvarez Andrew Swart Kalpana Jain
+11 4320 2791 +1 416 813 2335 +91 11 4602 1406
edalvarez@deloitte.com aswart@deloitte.ca kajain@deloitte.com
Argentina Canada Mexico

Alejandro Jaceniuk Ben–Schoeman Geldenhuys Cesar Garza
+54 11 4320 2700 ext. 4923 +1 416 775 7373 +52 871 7474401 x4401
ajaceniuk@deloitte.com bgeldenhuys@deloitte.ca cgarza@deloittemx.com
Australia China Peru

Ian Sanders Kevin Xu Karla Velásquez
+61 3 9671 7479 +86 10 85207147 +51 1 211 8559
iasanders@deloitte.com.au kxu@deloitte.com.cn kvelasquez@deloitte.com
64
Poland United Arab Emirates
Zbig Majtyka Salam Awawdeh
+48 32 508 0333 +971 4 376 8888
zmajtyka@deloittece.com SAwawdeh@deloitte.com
Russia – CIS United Kingdom

Igor Tokarev Tim Biggs
+74 95 787 0600 x 8241 +44 20 7303 2366
itokarev@deloitte.ru tibiggs@deloitte.co.uk
Southeast Asia United Kingdom

Rick Carr James Ferguson
+65 623 27138 +44 20 7007 0642
RickCarr@deloitte.com jaferguson@deloitte.co.uk
Switzerland United States

David Quinlin Sandeep Verma
+41 58 279 6158 +1 214 840 7182
dquinlin@deloitte.ch sxverma@deloitte.com
Switzerland United States

Matt Sheerin Amy Winsor
+41 58 279 7235 +1 303 312 4156
masheerin@deloitte.ch awinsor@deloitte.com
Turkey
Uygar Yörük
+90 312 295 4700
uyoruk@deloitte.com
65
Endnotes
1. Deloitte, February 2017. “The digital revolution: Mining starts 13. BHP.com. “BHP Billiton Foundation.” Accessed at https://www.bhp.
to reinvent the future.” Accessed at https://www2.deloitte.com/ com/community/bhp–billiton–foundation on December 7, 2017.
content/dam/Deloitte/global/Documents/Energy-and-Resources/
14. Sudbury Mining Solutions Journal, November 14, 2016.
gx-er-digital-revolution-report.pdf on October 23, 2017.
“Mental Health training available to mining industry,” by Kathy
2. Deloitte, February 2017. “The digital revolution: Mining starts Stackelberg. Accessed at http://www.sudburyminingsolutions.com/
to reinvent the future.” Accessed at https://www2.deloitte.com/ mental–health–training–available–to–mining–industry.html on
content/dam/Deloitte/global/Documents/Energy-and-Resources/ October 31, 2017.
15. Mining Magazine, August 25, 2017. “Aussie trucks go blue for
3. Deloitte, February 2017. “The digital revolution: Mining starts mental health.” Accessed at http://www.miningmagazine.com/
to reinvent the future.” Accessed at https://www2.deloitte.com/ management/workforce–wellbeing/aussie–trucks–go–blue–for–
content/dam/Deloitte/global/Documents/Energy-and-Resources/ mental–health/ on October 31, 2017.
16. Mining.com, July 16, 2017. “Glencore tackles difficult subject
4. Deloitte, “Innovation in mining series” Accessed at https://www2. through new charity,” by Andrew Topf.” Accessed at http://www.
deloitte.com/global/en/pages/energy–and–resources/articles/ mining.com/glencore–tackles–difficult–subject–new–charity/ on
innovation–in–mining–series.html accessed on October, 24, 2017 October 31, 2017.
5. Vale, December 16, 2016. “Vale inaugurates the largest project 17. Blackbook Motorsport, October 16, 2017. “Antofagasta
in the history of the mining industry.” Accessed at http:// Minerals named as title sponsor of Santiago ePrix,” by George
saladeimprensa.vale.com/en/Paginas/Articles.aspx?r=Vale_ Dudley. Accessed at http://www.blackbookmotorsport.com/
inaugurates_the_largest_project_in_the_history__of_the_mining_ news/antofagasta–minerals–named–as–the–title–sponsor–
industry_&s=Mining&rID=979&sID=6 on October 24, 2017. of–santiago–eprix on December 7, 2017; Energy and Mines,
November 8, 2017. “Chile’s Antofagasta moves to renewable
6. World Economic Forum, November 10, 2014. “Deep sea mining:
energy,” by Kate Dougherty. Accessed at http://energyandmines.
the new frontier in the struggle for resources?” Accessed at https://
com/2017/11/chiles–antofagasta–moves–to–renewable–energy/
www.weforum.org/agenda/2014/11/deep–sea–mining–the–new–
on December 7, 2017.
frontier–in–the–struggle–for–resources/ on October 24, 2017.
18. Rio Tinto, August 2017. “Iron Ore – delivering optimal value,”
7. Deloitte, November 2014. “Agiletown: the relentless march
by Chris Salisbury. Accessed at http://www.riotinto.com/
of technology and London’s response.” Accessed at https://
documents/170809_Presentation_Iron_Ore_roadshow.pdf on
www2.deloitte.com/uk/en/pages/growth/articles/agiletown–the–
October 31, 2017.
relentless–march–of–technology–and–londons–response.html on
October 25, 2017. 19. Hellenic Shipping News Worldwide, June 10, 2017. “Russia coal
exports may be slashed by dust control measures.” Accessed at
8. Deloitte, February 2017. “The digital revolution: Mining starts
http://www.hellenicshippingnews.com/russia–coal–exports–may–
to reinvent the future.” Accessed at https://www2.deloitte.com/
be–slashed–by–dust–control–measures/ on November 1, 2017.
content/dam/Deloitte/global/Documents/Energy-and-Resources/
gx-er-digital-revolution-report.pdf on October 23, 2017. 20. Mining.com, May 17, 2017. “Here’s why Colombia’s mining sector
is losing its shine,” by Cecilia Jamasmie. Accessed at http://www.
9. South32, 2017. “Women workers are a valuable resource.”
mining.com/heres–colombias–mining–sector–losing–shine/ on
Accessed at https://www.south32.net/sustainability/case–studies/
November 1, 2017.
women–workers–are–a–valuable–resource on December 6, 2017.
21. The New York Times, April 1, 2017. “El Salvador’s Historic
10. Deloitte Review, July 31, 2017. “Tech fluency: A foundation of
Mining Ban.” Accessed at https://www.nytimes.com/2017/04/01/
future careers,” by Anthony Stephan, Martin Kamen, Catherine
opinion/sunday/el–salvadors–historic–mining–ban.html on
Bannister. Accessed at https://www2.deloitte.com/dup–us–en/
November 1, 2017.
deloitte–review/issue–21/tech–fluency–mastering–the–language–
of–technology.html on October 26, 2017. 22. BBC News, July 25, 2017. “Acacia Mining rejects $190bn
Tanzanian tax bill.” Accessed at http://www.bbc.com/news/
11. Hermes Investment Management, 2017. “Climate Change
business–40714086 on November 1, 2017.
Shareholder Resolutions receive Board support of Anglo
American, Glencore and Rio Tinto.” Accessed at https://www. 23. Quartz Africa, July 25, 2017. “Tanzania has hit a British
hermes–investment.com/uki/blog/press/climate–change– mining company with a fine worth two centuries of revenue,” by
shareholder–resolutions–receive–board–support–of–anglo– Yomi Kazeem. Accessed at https://qz.com/1038094/tanzania–
american–glencore–and–rio–tinto/ on December 7, 2017. has–hit–acacia–mining–with–a–190–billion–fine–and–tax–bill/ on
November 1, 2017.
12. Brisbane Times, February 4, 2015. “BHP Billiton to follow Rio Tinto’s
tax transparency lead,” by Amanda Saunders. Accessed at https:// 24. De Beers Group of Companies, 2015. “Turning finite resources
www.brisbanetimes.com.au/business/companies/bhp–billiton–to– into enduring opportunity.” Accessed at http://www.debeersgroup.
follow–rio–tintos–tax–transparency–lead–20150204–135thq.html com/content/dam/de–beers/botswana/media/reports/De_Beers_
on November 30, 2017. Impact_Botswana_2015.pdf on November 1, 2017.
66
25. CBC News, September 6, 2016. “Fort McKay First Nation to put 37. The Telegraph, June 22, 2017. “Peter Hambro ousted from gold
$350M into Suncor oil sands tank farm.” Accessed at http://www. miner Petropavlovsk after losing board battle with Russian
cbc.ca/news/canada/calgary/first–nation–puts–350m–oilsands– investors,” by Jon Yeomans. Accessed at http://www.telegraph.
project–1.3749640 on December 4, 2017. co.uk/business/2017/06/22/peter–hambro–ousted–gold–miner–
petropavlovsk–losing–board–battle/ on November 7, 2017.
26. Mimosi Peer Ledger Rangold, accessed at http://mimosi.
peerledger.com/ accessed on December 14, 2017 38. Reuters, September 26, 2017. “Hedge fund Paulson & Co declares
war on poor gold mining returns,” by Nicole Mordant. Accessed
27. The AusIMM Bulletin, June 2017. “How miners can improve
at https://ca.reuters.com/article/businessNews/idCAKCN1C12OJ–
water management,” by Ralph Heath. Accessed at https://www.
OCABS on November 7, 2017.
ausimmbulletin.com/feature/miners–can–improve–water–
management/ on November 6, 2017. 39. Harvard Business Review, May–June 2017. “The Error at the Heart
of Corporate Leadership,” by Joseph L. Bower and Lynn S. Paine.
28. International Council on Mining & Metals, International Finance
Accessed at https://hbr.org/2017/05/managing–for–the–long–term
Corporation, 2017. “Water in the Mining Sector.” Accessed at
on November 7, 2017.
http://www.ifc.org/wps/wcm/connect/ee079cb5–222c–4fe7–
8844–8210ac77f0dc/ICMM–IFC–Water–and–Mining–FINAL. 40. Vimeo, November 17, 2017. “Ira Millstein at Ramsay Talks.”
pdf?MOD=AJPERES on November 6, 2017. Accessed at https://vimeo.com/243664449 on December 6, 2017.
29. CDP, July 19, 2017. “World’s mining heavyweights put $16 billion at 41. Bloomberg Markets, December 21, 2016. “Gold Miners Are
risk in climate costs.” Accessed at https://www.cdp.net/en/articles/ Running Out of Metal: Five Charts Explaining Why,” by Kevin
investor/press–release–worlds–mining–heavyweights–put–16– Crowley. Accessed at https://www.bloomberg.com/news/
billion–at–risk–in–climate–costs on November 7, 2017. articles/2016–12–21/gold–miners–are–running–out–of–metal–
five–charts–explaining–why on December 4, 2017.
30. ABC News, August 1, 2015. “Flooded Vietnam coal mines
leaking toxic slurry into World Heritage–listed Ha Long Bay: 42. Mining.com, November 24, 2017. “Gold CEO lashes out against
environmentalists.” Accessed at http://www.abc.net.au/ his industry.” Accessed at http://www.mining.com/web/gold–ceo–
news/2015–08–01/heavy–rain–floods–vietnam–coal–mines– lashes–industry/ on December 4, 2017.
threatening–ha–long–bay/6665570 on November 6, 2017.
43. CNBC, October 24, 2017. “Goldman says market not ‘fully
31. BHP, November 28, 2017. “Ten reasons why we like appreciating’ what’s sending copper higher, as it ups forecast,”
copper.” Accessed at https://www.bhp.com/media–and– by Patti Domm. Accessed at https://www.cnbc.com/2017/10/24/
insights/prospects/2017/11/ten–reasons–why–we–like– goldman–says–market–not–fully–appreciating–whats–sending–
copper?utm_source=Twitter&utm_medium=Organic&utm_ copper–higher–as–it–ups–forecast.html on December 4, 2017.
campaign=Prospects&utm_content=TopReasonsCopper on
44. Money Metals Exchange, November 15, 2017. “Two–Thirds Of The
December 4, 2017.
Top Primary Silver Miners Suffered Production Declines In 2017,”
32. Canadian Mining Journal, 2017. “Getting to CMIC’s zero waste by Steve St. Angelo. Accessed at https://www.moneymetals.com/
vision.” Accessed at http://www.canadianminingjournal.com/ news/2017/11/15/silver–miner–production–decline–001269 on
features/getting–cmics–zero–waste–vision/ on December 4, 2017. December 4, 2017.
33. Shared Value Initiative. “Anglo American eMalahleni Water 45. Mining.com, February 23, 2017. “Glencore sees zinc, nickel, copper
Reclamation Plant,” by Chile Hidalgo, Kyle Peterson, Dane Smith, price rally continuing,” by Frik Els. Accessed at http://www.mining.
and Hugh Foley. Accessed at https://sharedvalue.org/groups/ com/glencore–sees–zinc–nickel–copper–price–rally–continuing/ on
anglo–american–emalahleni–water–reclamation–plant on December 4, 2017.
November 6, 2017.
46. BloombergGadfly, August 18, 2017. “Zinc’s Supply Surge Is
34. Goldcorp. “Towards Zero Water (H2Zero).” Accessed at https:// Coming,” by David Fickling. Accessed at https://www.bloomberg.
www.goldcorp.com/strategy/reducing–costs/default.aspx on com/gadfly/articles/2017–08–18/zinc–s–supply–surge–is–coming
December 4, 2017. on December 4, 2017.
35. The Telegraph, July 19, 2017. “Elliott attacks ‘disastrous’ BHP 47. Wealth Research Group. “This Trend is Truly Unstoppable,” by Lior
Billiton plan to build potash mine,” by Jon Yeomans. Accessed Gantz. Accessed at https://www.wealthresearchgroup.com/fcc/ on
at http://www.telegraph.co.uk/business/2017/07/19/elliott– January 12, 2018.
attacks–disastrous–bhp–billiton–plan–build–potash–mine/ on
48. Mining.com, May 1, 2017. “Elon Musk’s worst nightmare: child
November 7, 2017.
labor and cobalt supply.” Accessed at http://www.mining.com/
36. Financial Times, August 16, 2017. “Elliott raises stake in miner BHP web/elon–musks–worst–nightmare–child–labor–cobalt–supply/ on
Billiton to 5%,” by Henry Sanderson. Accessed at https://www. December 4, 2017.
ft.com/content/e4a2f4c2–825f–11e7–a4ce–15b2513cb3ff on
November 6, 2017.
67
49. Barrick, April 6, 2017. “Barrick Announces Strategic Cooperation 62. MarketWatch, October 13, 2017. “The Shift to Lithium is Much
Agreement with Shandong Gold.” Accessed at http://www.barrick. Bigger Than Predicted.” Accessed at https://www.marketwatch.
com/investors/news/news–details/2017/Barrick–Announces– com/story/the–shift–to–lithium–is–much–bigger–than–
Strategic–Cooperation–Agreement–with–Shandong–Gold/default. predicted–2017–10–13–8203463 on November 15, 2017.
aspx on November 9, 2017.
63. Trading Economics. Accessed at https://tradingeconomics.com/
50. Financial Times, May 31, 2017. “Fosun buys stake in Russian gold commodity/lithium on November 15, 2017.
miner Polyus,” by Henry Foy and Henry Sanderson. Accessed
64. Benchmark Mineral Intelligence, May 4, 2016. “Graphite Demand
at https://www.ft.com/content/e5652edc–45fd–11e7–8519–
From Lithium Ion Batteries To More Than Treble in 4 Years.”
9f94ee97d996 on November 9, 2017.
Accessed at http://benchmarkminerals.com/graphite–demand–
51. BNN, March 28, 2017. “Goldcorp buys Exeter, teams with Barrick from–lithium–ion–batteries–to–more–than–treble–in–4–years/ on
on Chile mining projects,” by Nicole Mordant. Accessed at http:// November 15, 2017.
www.bnn.ca/barrick–goldcorp–team–up–to–develop–chile–
65. Graphite Investing News, October 23, 2017. “10 Top Graphite–
mining–projects–1.708086 on November 9, 2017.
producing Countries,” by Siv Padhy. Accessed at https://
52. Steel Guru, July 25, 2017. "Mining Giants join juniors in the hunt for investingnews.com/daily/resource–investing/critical–metals–
minerals. Accessed at https://steelguru.com/mining/mining-giants- investing/graphite–investing/top–graphite–producing–countries–
join-juniors-in-the-hunt-for-minerals/486005 on January 9, 2018. china–india–brazil–canada/ on November 15, 2017.
53. Rio Tinto, July 6, 2017. “Digging, Data, and Disruption,” by Bold 66. Cision PR Newswire, April 25, 2017. “Cobalt Prices to Rocket as
Baatar. Accessed at http://www.riotinto.com/documents/170706_ Tesla and Apple Scramble for Supplies.” Accessed at https://
Digging_Data_and_Disruption_Mining_in_a_world_of_change.pdf on www.prnewswire.com/news–releases/cobalt–prices–to–rocket–
November 9, 2017. as–tesla–and–apple–scramble–for–supplies–620374383.html on
November 15, 2017.
54. South China Morning Post, November 13, 2017. “IAMGOLD
leverages existing infrastructure and robust exploration to 67. The Economist, March 11, 2017. “Mining companies have dug
sustain reserve growth.” Accessed a http://www.scmp.com/ themselves out of a hole.” Accessed at https://www.economist.
country-reports/business/topics/canada-business-report-2017/ com/news/business/21718532–electric–vehicles–and–batteries–
article/2119085/iamgold-leverage on December 5, 2017. are–expected–create–huge–demand–copper–and–cobalt–mining
55. McKinsey & Company, September 2016. “The CEO guide to
boards.” Accessed at https://www.mckinsey.com/global–themes/ 68. RFC Ambrian, July 2017. “The Alchemist, Issue 31.” Accessed at
leadership/the–ceo–guide–to–boards on November 14, 2017. http://www.rfcambrian.com/wp–content/uploads/2017/07/The–
Alchemist–Issue–31–Cobalt.pdf on November 15, 2017.
56. Deloitte Insights, March 7, 2014. “From diversity to inclusion,” by
Juliet Bourke, Christie Smith, Heather Stockton, Nicky Wakefield. 69. The Economist, March 11, 2017. “Mining companies have dug
Accessed at https://dupress.deloitte.com/dup-us-en/focus/human- themselves out of a hole.” Accessed at https://www.economist.
capital-trends/2014/hc-trends-2014-diversity-to-inclusion.html? on com/news/business/21718532–electric–vehicles–and–batteries–
November 14, 2017. are–expected–create–huge–demand–copper–and–cobalt–mining
57. International Energy Agency, 2017. “Global EV Outlook 2017.”
Accessed at https://www.iea.org/publications/freepublications/ 70. CNBC, October 24, 2017. “Goldman says market not ‘fully
publication/GlobalEVOutlook2017.pdf on November 15, 2017. appreciating’ what’s sending copper higher, as it ups forecast,”
by Patti Domm. Accessed at https://www.cnbc.com/2017/10/24/
58. International Energy Agency, 2017. “Global EV Outlook 2017.”
goldman–says–market–not–fully–appreciating–whats–sending–
Accessed at https://www.iea.org/publications/freepublications/
copper–higher–as–it–ups–forecast.html on November 15, 2017.
publication/GlobalEVOutlook2017.pdf on November 15, 2017.
71. The Globe and Mail, October 31, 2017. “One metal will be
59. The drive, August 8, 2017. Accessed at http://www.thedrive.com/
transformed by the electric car boom” by Mark Burton and
sheetmetal/13297/teslas-gigafactory-is-already-dominating-ev-
Jack Farchy. Accessed at https://www.theglobeandmail.com/globe–
battery-production and is aiming for an annual lithium-ion battery
investor/investment–ideas/nickel–forecast–charges–ahead–on–
production capacity of 35 gigawatt-hours (GWh) accessed on
electric–car–battery–demand/article36784954/ on
November 15, 2017.
November 15, 2017.
60. Bloomberg, June 28, 2017. “China Is About to Bury Elon Musk in
72. Astronotes, September 22, 2017. “Asteroid Mining, the Next
Batteries,” by Joe Ryan. Accessed at https://www.bloomberg.com/
Frontier.” Accessed at http://www.armaghplanet.com/blog/
news/articles/2017–06–28/china–is–about–to–bury–elon–musk–
asteroid–mining–the–next–frontier.html on November 15, 2017.
in–batteries on November 15, 2017.
73. World Resources Institute, May 25, 2016. “Countries’ Clean Energy
61. BloombergGadfly, September 27, 2017. “Peak Lithium? Not So
Commitments, by the Numbers,” by Katherine Ross. Accessed
Fast,” by David Fickling. Accessed at https://www.bloomberg.com/
at http://www.wri.org/blog/2016/05/countries–clean–energy–
gadfly/articles/2017–09–27/take–peak–lithium–forecasts–with–a–
commitments–numbers on November 15, 2017.
pinch–of–andean–salt on November 15, 2017.
68
74. Go 100% Renewable Energy. Accessed at http://www.
go100percent.org/cms/ on November 15, 2017.
75. Mining.com, July 5, 2017. “Getting scrappy: China iron ore

demand may falter as steel recycling grows,” by Manolo Serapio
Jr and Muyu Xu. Accessed at http://www.mining.com/web/
getting–scrappy–china–iron–ore–demand–may–falter–steel–
recycling–grows/ on November 15, 2017.
76. Mining Weekly, June 12, 2015. “Urban mining has long–term
potential to contribute significantly to gold supply.” Accessed
at http://www.miningweekly.com/print–version/urban–mining–
has–long–term–potential–to–contribute–significantly–to–gold–
supply–2015–06–12 on November 15, 2017.
77. Recycling International, November 4, 2016. “Ferrous

scrap to gain ‘maximum traction’ in US$406 billion metals
market,” by Kirstin Linnenkoper. Accessed at https://www.
recyclinginternational.com/recycling–news/10030/ferrous–
metals/global/ferrous–scrap–gain–039–maximum–traction–039–
us–406–billion–metals–market on November 15, 2017.
78. CNBC, April 6, 2017. “In a new space age, Goldman

suggests investors make it big in asteroids,” by Lauren Thomas.
Accessed at https://www.cnbc.com/2017/04/06/goldman-sachs-
tells-investors-to-consider-new-space-age.html on
November 15, 2017.
79. Planetary Resources. “A potential commercial space station

market.” Accessed at http://www.planetary.org/multimedia/
space–images/charts/a–potential–commercial–space.html on
November 15, 2017.
80. Futurism, May 28, 2017. “NASA Is Fast–Tracking Plans to

Explore a Metal Asteroid Worth $10,000 Quadrillion,” by Karla
Lant. Accessed at https://futurism.com/nasa–fast–tracking–
plans–explore–metal–asteroid–worth–10000–quadrillion/ on
November 15, 2017.
69
Notes
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
...................................................................................................................................
70
Tracking
Tracking the
the trends
trends 2018
2017
05
55
71
www.deloitte.com/mining
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private
company limited by guarantee (“DTTL”), its network of member firms, and their
related entities. DTTL and each of its member firms are legally separate and
independent entities. DTTL (also referred to as “Deloitte Global”) does not provide
services to clients. Please see www.deloitte.com/about to learn more about our
global network of member firms.
Deloitte provides audit & assurance, consulting, financial advisory, risk advisory,
tax and related services to public and private clients spanning multiple industries.
Deloitte serves four out of five Fortune Global 500® companies through a globally
connected network of member firms in more than 150 countries and territories
bringing world-class capabilities, insights, and high-quality service to address
clients’ most complex business challenges. To learn more about how Deloitte’s
approximately 245,000 professionals make an impact that matters, please connect
with us on Facebook, LinkedIn, or Twitter.
This communication contains general information only, and none of Deloitte

Touche Tohmatsu Limited, its member firms, or their related entities (collectively,
the “Deloitte Network”) is, by means of this communication, rendering professional
advice or services. Before making any decision or taking any action that may affect
your finances or your business, you should consult a qualified professional adviser.
No entity in the Deloitte Network shall be responsible for any loss whatsoever
sustained by any person who relies on this communication.
© 2018. For information, contact Deloitte Touche Tohmatsu Limited.

Designed and produced by the Deloitte Design Studio, Canada. 17–5250V

Deloitte CN Er Tracking The Trends 2018 en 180131

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Deloitte CN Er Tracking The Trends 2018 en 180131

Uploaded by

Copyright:

Available Formats

Tracking the trends 2018

The top 10 issues shaping

Changing for the better 03

1. Bringing digital to life 04

2. Overcoming innovation barriers 10

3. The future of work 16

4. The image of mining 22

5. Transforming stakeholder relationships 28

7. Changing shareholder expectations 40

8. Reserve replacement woes 46

9. Realigning mining boards 52

10. Commodities of the future 56

Out with the old, in with the new 63

highs and lows in the mining sector continue. During

this time, we have seen an emergence of innovative

companies adopting transformative practices. As

we now stand in the middle of what appears to be

Figure 1: Integrated operational planning, control, and decision support

Integrated operational planning, control and decision support

Real time Data platforms

Integrated Enterprise planning and support processes

Maintenance Supply Energy management HSE & Community Finance HR Marketing

To be sure, analysis of historical Central to enabling this will be an

Decisions informed by data Convergence of information “Many mining organization

Leading strategies in focus

From left field

Figure 2: Mining consistently underspends in

2005 2006 2007 2008 2009 2010 2011

Source: Deloitte analysis

Leading strategies in focus

From left field

Despite the resource potential, deep sea extraction is

Critically, complex environmental and access issues

Automation is transforming the labor market. Deloitte

Inside the future of work

Leading strategies in focus

From left field

Raising the bar

New behaviors Rio Tinto all passed shareholder of radical transparency

Re–engaging employees If companies truly hope to repair

Leading strategies in focus

Align operational decisions Work directly with

Stakeholder management in action

This isn’t to imply that transforming

“If there’s one area where the industry needs to both

Leading strategies in focus

From left field

New approaches needed “…ethical water stewardship is

Approximately 25 percent of mining production will

Water in the spotlight

Water management in action

“Mining companies understand how much water they

Leading strategies in focus

From left field

“When confronted with an activist shareholder,

Leading strategies in focus

Shine a spotlight on activism

From left field

Figure 3: Share of 2016 global colbalt production

US Australia Canada China DRC Cuba Russia Zambia

Source: Wealth Research Group 47

Figure 4: Mining capex Figure 5: Exploration budgets by stage

Sustaining capex Growth capex Early stage Late stage Minesite